I am starting to analyze crypto-currency data again to
outline future investing options. In my first effort, I tried to convince
myself that focusing only on bitcoin (BTC) was better than looking at some of
the alternate coins. As documented in my previous posts, I failed and
demonstrated that there are some coins with better growth patterns over the
last year.
I’ve decided to re-visit some of my prior analysis and
update the data considering the crazy growth and decline patters in the latter
part of 2017 and the first part of 2018. In July 2017, I looked at two simple
strategies for trading coins. The coins involved were BTC, ETH (Ethereum) and
LTC Litecoin). I downloaded their daily price data from Jan 1st,
2017 through July 29th, 2017.
The 1st scenario was buy and hold. Starting
with $1,000 on day 1, I used one-third to purchase as many of each coin as possible.
This resulted in 0.33 BTC, 40.95 ETH, and 75.41 LTC. These were held until the
end of the period and their daily value grew to $12,047 at the end of the
period.
The 2nd scenario was a simple trading strategy. At
the close of each day, the change in value of each coin was computed. A portion of
the best performing coin was sold and the proceeds used to buy the worst
performing coin. Kind of a dollar cost averaging scheme. The amount of coin
depended on the amount the best performing coin changed. At the end of the
period, the value grew to $8,988. This wasn’t as good a strategy as buy and
hold (thank you Warren Buffet).
Following is a chart of their daily value.
The next step is to repeat the analysis using data through the
end of the 1st quarter of 2018. That will be my next post. Follow me
on Twitter, @ole44bill, to be notified when I post it.
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