Introducing ETH/BTC Ratio Trading on TokenSets
The ETH/BTC EMA Ratio Trading Set is now live on TokenSets
Today, we’re excited to announce the launch of the ETH/BTC EMA Ratio Trading Set on TokenSets — the first Open Finance product that automatically rebalances between ETH and WBTC to capture trends in the ratio.
Key Points:
- The ETH/BTC EMA Ratio Trading Set is live on TokenSets
- The Set implements a crossover strategy on the ETH/BTC 26 Day Exponential Moving Average (26 EMA)
- More asset pairs and strategies are coming!
- ETHBTCEMACO is currently above the EMA and sitting in ETH. Automatically trade the ETH/BTC ratio by acquiring the Set on TokenSets today!
Why Trade the ETH to BTC Ratio?
In crypto, many traders benchmark the performance of any cryptoasset against BTC. Various Reddit trading forums and Crypto Twitter compare the performance of ETH against the performance of BTC — what traders refer to as the “ETH/BTC Ratio”.
Trading the ratio allows traders to stay 100% exposed to the potential upside in crypto markets while taking advantage of changes in ETH and BTC price whenever prices are not as correlated with each other.
Historically, the ETH/BTC ratio has oscillated frequently which traders have taken advantage to capture more return (whether it’s to “stack sats” or “gather gwei”).
How the Set Works
The ETH/BTC EMA Ratio Trading implements a crossover strategy on the ETH/BTC 26 day exponential moving average. Learn more about EMAs here.
At a high level, if the ETH/BTC ratio falls below support, ETHBTCEMACO rebalances 100% ETH into BTC expecting BTC will continue outperforming ETH. Conversely, if the ETH/BTC ratio rises above resistance, the Set rebalances into ETH expecting ETH will continue to break out against BTC.
Rebalance criteria for the ETHBTCEMACO Set
The rebalance criteria includes a minimum interval of 48 hours between rebalances and a confirmation period after the initial price-indicator crossover to reduce false positive signals. If the signal at the time of the initial crossover (e.g. ratio > moving average) matches the signal after 1 hour, then the Set will kickoff a rebalance. If the signal fails to match the signal after 4 hours, then the rebalance expires and another price-indicator crossover must occur.
These parameters were selected to feature more aggressive execution times compared to other moving average crossover Sets such as the ETH20SMACO (which had 6–12 hour confirmation and 96 hour minimum rebalance interval).
How the ETHBTCEMACO Set Performs
Disclaimer: The content below is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. The content below is provided for educational purposes only, and not indicative of future performance. None of the following should be interpreted as investment advice. The tools used below follow a predefined set of parameters and aren’t actively managed by Set Labs Inc.
This chart below compares the hypothetical performance of holding the ETHBTCEMACO Set against holding 100% ETH or BTC over the last 3 years, assuming a slippage rate of 1% during each rebalance (in reality, Set rebalances have settled for less slippage in the 0.5–0.8% range).
The model shows the Set would have outperformed over the given historical time period and been subject to the volatility of BTC and ETH prices. The Set historically has made a trade approximately every 9 days.
The chart below illustrates the ETH that would have been accumulated using the ETHBTCEMACO Set vs a buy and hold strategy following the same assumptions above.
It’s important to keep in mind the the charts above are based on a number of assumptions and are only meant for illustrative purposes. As always, past performance is not indicative of future performance. Trading is risky — please do your own research!
These charts use generated ETH hourly data sourced from Gemini. In production, the ETHBTCEMACO Set rebalances based on MakerDAO’s ETH price feed, which may output different results.
Conclusion
ETH is currently outperforming BTC based on the 26 EMA. Get started minting the ETHBTCEMACO Set on TokenSets here!
If you have an idea for a strategy that you’d like to see on TokenSets, please don’t hesitate to reach out to us.
Developers interested in working with us can also reach out to our friendly team by emailing us at hello@setprotocol.com or by joining our Telegram chat.
