Trading Signals: A few comments from us

Most will know that fundamentally, we expect Bitcoin prices to decline to the 52,000/55,000 area as Bitcoin’s market structure is weak. Historically, there tends to be a consolidation period after the halvings.

Our trading signals are designed to operate independently of our personal (fundamental) views, focusing solely on patterns with a proven high probability of historical follow-through. This approach ensures an objective and reliable analysis that tends to be complimentary to form our fundamental views but operates independently (of our views).

Although a bullish altcoin signal will unlikely sustain a rally if Bitcoin declines 20% from here (52,000/55,000), who knows if our fundamental view is correct? As portfolio managers, we had different portfolios: one fundamental and one model (systematic), and combining both had lower volatility and better diversification. This is why ‘newsletter’ (fundamental views) and ‘trading signals’ (models) are two different publications.

We have worked for a long time with these models, and while 11 out of 13 Bitcoin and Ethereum signals have been profitable, they only generate 1-2 monthly signals. The altcoin signals have outperformed Ethereum (by 30% from a model portfolio perspective), but they struggle when Bitcoin consolidates, as Bitcoin is the dominant factor in this cycle. Looking at the altcoin performance, they have become more random without the follow-through that we have seen previously.

Hence, since the last two months, when we overwrote the signals fundamentally (see March 8), as our view was (and is) that there is a period of uncertainty (for Bitcoin), the signals have also consolidated.

This might continue as Bitcoin is in this consolidation factor and remains the key driver – in the absence of an altcoin season. We would be careful in managing risks.

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