AOTB – Mini-Series
Hello Bubble Riders!
In this newsletter, I’m going to introduce yet another kind of portfolio. It’s the 3-Stage Crypto Whale Portfolio. I’ve introduced a series of portfolios lately so that people will understand how they work.
So far, we have the following:
- The Dynamic Portfolio – This is our flagship product, which is outperforming Coinbase Ventures, Alameda Research, and a16z (3 of the largest and best-known crypto funds) by about 70%.
- The Crypto Maxi Portfolio – This portfolio aims to give you a maximum return in terms of cryptocurrencies rather than US dollars. When backtested–and after our live walkforward during the present crypto winter for 2022, it outperformed HODL-ing by better than 10x with about 40% the volatility.
- The Crash Cost Averaging Portfolio – The simplified version of this strategy out-performed dollar cost averaging by 6.4x.
Maintaining those portfolio offerings requires quite a bit of work from the AOTB team, which is why they’re all only available to subscribers. I’m going to replace the daily Yield Farming reports in the DIY-er offering with the Crash Cost Averaging portfolio, incidentally, since the safest form of Yield Farming is an intense and complicated task. We’ll replace that YF, with a more actionable review of offerings at various sites–and perhaps a YF offering of our own.
Today, I want to give out yet another portfolio. Because this one has thin data, I’m not going to charge for it while we do a live walk-forward. Let’s begin with a brief explanation of what it does.
How the Crypto Whale Watch Portfolio Works
Like our flagship product, this portfolio also uses a 3 stage algorithm–but it pulls on very different data sources and uses very different signals.
Just like our flagship product, stage 1 determines whether to invest in the crypto market. In practice, the answer is always yes, as the data we use tracks the larges on-chain whales
Here is one of the inputs. You can see from the following image that the whales got in early on the present bounce.That’s why this is a nice whale metric.
Just like our flagship, stage two determines how much to invest. You’ll notice that on-chain whales are in cryptos pretty all the time. As a result, their returns bounce around a lot. Stage 2, then, uses our momentum metrics to determine whether a follower should invest at the same rate as the whales, or whether they should have 2x the amount of stable coins.
For the third stage, the team determines which coins to invest in. Here’s the twist in the process. We don’t look exclusively at which coins the whales are investing in on chain. The reason is that they only have so much out in the open that way. As a result, we augment that information with the top holdings of the three largest crypto funds: a16z, Coinbase Ventures, and Binance Labs.
The portfolio selects the top 5 of those and updates each week (for now). At present, it would be holding:
- ~10% Stable Coins
- ~20% ETH
- ~10% LDO
- ~20% NEAR
- ~20% UMA
- ~20% ONE
Obviously, a closer distribution would have 12.15% LDO and 7.85% in USDC. But these sorts of distributions are always approximate.
Again, I’ve only got about 1 year’s worth of solid data on this, so I’m not sure yet that it’ll work out as planned. The other portfolios have historical results that can extend back 5 years, which isn’t a lot still, but certainly gives me more confidence.
This week I wrote a number of pieces that are related to this post, so you might want to have a look if you’ve missed them.
That’s it for this week. Remember to join us on Discord if you haven’t already.
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