RIALTO.AI Q4 2017 Report
Market report
During the Q4 2017, the overall market capitalization of the crypto market increased 4 times, from $147 billion, to almost $600 billion. Top 10 cryptocurrencies observed significant additions and deletions. New entrants are Cardano and Stellar, while Monero and NEO fell out of the top league.
During the second half of the quarter we have witnessed a considerable bull run as the cryptocurrencies attracted the interest of general public and thus generally unsophisticated traders. Relatively large price swings were observed, these, however, generally pointed upwards. This bull run ended in early January when the rumors emerged that South Korea is introducing a blanket ban on cryptocurrency trading.
Progress report
RIALTO.AI trading system is based on test and deployed environments. The test environment represents variations of the main trading algorithm where different optimization strategies are being tested as well as addition of new markets and cryptocurrencies. Once the testing is successfully finished, the process can be used and deployed into the main algorithm.
RIALTO.AI is currently engaging in arbitrage and market-making on six exchanges, trading XRP, EUR, USD, ETH and BTC. Due to explosive overall crypto market growth in the last quarter, and consequently growth of the Total Assets, the utilization of Total Assets remains low, 0–25%. By holding a relatively minor share of the pool on the exchanges and frequently rebalancing the assets, we mitigate the counterparty risk.
Development of the AI trading bot started in October 2017. The team consists of a quantitative trader and three data scientists. Over 20 strategies have been prepared and back tested. The strategy needs to pass rigorous risk metrics in order to be eligible for test and then deployment phase. So far 4 long-only strategies have entered the test phase and they can be applied to the largest crypto-fiat pairs but only to the top 5 exchanges with the greatest liquidity. Since December 1st we have been running four strategies in real-time trading with an amount less than $50,000. Trading with the test amount of capital resulted in a 16.74% return in one month. The testing phase will continue to run until the end of Q1 2018.
Future Plans
In the near future, we plan to shift the arbitrage and market-making deployed capital to the multiorder book bot. Its increased efficiency (profit per trade) and operational fluidity make it a more suitable choice for our arbitrage and market-making activities.
With the introduction of the platform later in Q1, users will be able to manage the use of algorithms and allocation of their assets between idle state, arbitrage and market-making and predictive trading bot. More on the functionality and design features can be read here.
We will continue adding new exchanges and currencies to increase the utilization of the algorithms. These, however, have to pass technical compliance review for exchanges, as well as liquidity and market availability requirements for cryptocurrencies.
We have been providing data feed to Hedge Project for the calculation of Buchman Crypto indices. Hedge will be introducing passive indexed investment vehicles (CTIs) in the near future. RIALTO.AI and Hedge have been discussing possibilities for further cooperation in the field of designated market-making and authorized participation for the CTI trading.
IMPORTANT: This is a version of a Q4 2017 adapted for publication on Medium. We invite you to read the full report here.
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