Meet the new term “Portfolio Bouncing.” Calvin, one of the founders of Hodlbot.io, began using pre-created automated portfolios to move in and out of positions quickly to reflect the market movements. That’s how he came up with it.
Before we move on, let’s clarify something.”Portfolio Bouncing” doesn’t require deep TA or candlesticks. All you need is to leverage past trends and correlations of the market.
Hodlbot’s data analysis and research confirmed that cryptocurrencies are fairly correlated with one another, though this has dropped from 2018 to 2019 (Source). From 2018 to 2019, the average correlation coefficient across the top 200 cryptocurrencies by market cap decreased from 0.89 to 0.58. HodlBot applied a one-tailed Welch’s T-test and found the decrease to be statistically significant. Then he began organizing portfolios accordingly.
The findings led to BTC dominated portfolios when BTC is running, Indexes during bull markets to capture the market performance and stable coins as a great way to hold value temporarily in down markets.
1. Begin with a HodlBot Top 20 Index. Or other index.
2. Create 4 Portfolios in the Hodlbot platform
- 100% BTC
- Alt Portfolio #1 – Coins that tend to run together
- Top Performing Alts of 2019 that are also correlated and often run together
- Cashout – 100% Stablecoin of your choice
3. Depending on the market movements:
– Bullish with Increasing BTC Dominance, Switch to 100% BTC Portfolio
– Bullish but certain alts running more than others, Switch into Alt portfolio #1 or Top Performing Alts 2019.
– Bearish but BTC still moving slowly, Switch to 100% BTC
– Bearish market with all things dropping, Switch into Cashout Portfolio
Since January 2019:
- HODL 10 104%
- HODL 20 108%
- HODL 30 58%
During this time using this strategy the portfolio value has increased 188%. Calvin mentions this is a strategy to ride the peaks and earn extra from the troughs, but is far from easy or perfect. Timing the market is impossible, and with indexes historically outperforming active traders over the past 15 years, it’s just as good of a strategy to select an index, and put it on autopilot for the next few years.
Remember these are just the findings of the Hodlbot.io team and not financial advice nor investment strategies but information and tools to help you understand the cryptocurrency markets.
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