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Our Bitcoin model incorporates two distinct signals from its own time series: one over a very short time period and one incorporating its longer term trend. It combines these two to determine the most appropriate signal at any point in time. There are periods in a longer term uptrend where things move sideways for a bit and we want to be out, but the model typically turns neutral rather than short in recognition that Bitcoin moves erratically and shorting is often not the right choice. Vice versa in a longer term downtrend we may generally be short but interrupt that for short and violent upbursts.
|Date open||Date closed||Days||Asset||Signal||Return||Result|
|We have a new LONG signal for Bitcoin which closes the previous short for a scratch trade. Bitcoin's supporting quantitative model has been calibrated to capture the majority of market movement within this asset for the past decade. What we are seeing now in this coiling tight range has produced some noisy signals resulting in very minor losses. We are anticipating a larger move soon and we trust our models will be on the right side of that to continue its outperformance.|
|Our Bitcoin long/short model has delivered a performance of +97% in 2020, compared to 32% on the buy and hold strategy. While the latest LONG signal delivered a -1.2% negative return, in a sense being wrong on the long side is less painful than on the short side as you're just moving along with the market (and not losing money when others are winning). Bitcoin has been moving range bound lately and the +1%, -1% changes make it harder for our models to pick up on a clear direction.|
|Well there you go. Our models closed the previous Bitcoin SHORT call which had been in place for 24 days with a +1% profit as Bitcoin has moved range-bound for a while. We're now shifting back into LONG mode, aligning with many our altcoin models which are currently flagging a similar stance. The Bitcoin signals models keeps up the outperformance of the long/short model at around +65% vs. the underlying on year-to-date basis.|
|So our Bitcoin signal just flipped to SHORT. This is an awkward one given that another cryptocurrency (Cardano) we cover as part of our premium assets is signalling LONG. Our Bitcoin model depends on a short term model, which had been negative since 8th June, as well as a long term model which just flipped to >25% signalling a negative stance. Things could move either way but it's clear momentum may be shifting.|
|On 8th of June our Bitcoin signal switched to neutral. The previous signal (long) had returned +3.5% as Bitcoin ranged in the 9000s. What you will typically see with our crypto models is that as assets behave like this (no clear direction), we would rather stay out. Obviously this risks missing out on some erratic +1000 candles, but it also avoids not getting hit by a -1000 candle at a time where the market feels uncertain. Trust our models to pick up on changing momentum pretty swiftly.|
|After riding down the drop from 9900 to 8800, Bitcoin reversed course and our models switched their recommendation from being neutral to going long.|