BTC in a Trading Range as ETH Outperforms

Sentiment in May was extremely bullish for Cryptocurrency but that wasn’t backed up by trading.

Yes both ETH and BTC climbed back close to their all time highs during the month but they did so without great conviction. Capturing some of the months headlines would include.

  • May started with many predicting that BTC would fall to $52,000-$55,000 range and would take ETH with it. ETF outflows and Miners typically selling after the halving seemed to be creating significant downward pressure. 
  • $5 Billion of BTC Miner sales were expected as miners tried to prop up their halved incomes.
  • 10x Research wrote on 7th May that “Ethereum remains this cycles basket case….adding ” Ethereum’s weak fundamentals are becoming a roadblock for BTC” 
  • Our algorithm’s agreed and we were short ETH across the board. (Important to note our trading is all systematic so the writings of those predicting the market has no bearing on our trading patterns, they just happen to concur at this time).
  • 10x Added : Ethereum’s decision to become ultrasound money has become as exciting as fixed-income investing (as we predicted 18 months ago). The only Ethereum bull story there is staking and re-staking. TVL, in general, sits at $94bn. Most of that is in staking (Lido $29bn) and restaking (EigenLayer $15bn) protocols. As a comparison, most of the TVL was in lending when TVL reached $180bn during the 2020/2021 bull market. Crypto TVL has half the amount where it should be as Bitcoin made new all-time highs.
  • Turned out we were all wrong! With the softening of US inflation figures mid month and the rumoured granting, (subsequently confirmed) of ETH ETF Spot, both BTC and ETH rallied strongly.
  • In yet another topsy turvy trading month it leaves many asking where markets are going from here. The reality is that macro economic conditions are now dictating the BTC price and by default, nearly all other coins. As long as BTC remains range bound altcoins may also go sideways.
  • Key dates will of course be the next US inflation data. The June 5 Bank of Canada rate decision may help US sentiment. Should it be a downward move, as is expected that may help but the key date will be June 12 and that all important US data, where anything sub 3.3% will be viewed as dovish for rates. In the meantime we might just be stuck between 60,000 and 73,000, which is not a bad place to be. 

Trading was difficult for our Key strategies during May as the lack of clear direction and very low volumes made for a very choppy market. We spent the early part of the month short Ethereum and then were caught short as ETH unexpectedly rallied against the trend. Headline figures were ;

  • Quant Pro strategy was almost flat at -0.4%, with the year to date showing 6.3% up, with 2.78 Sharpe.
  • AiQuant Pro was down 2.6% making it up 11.4% year to date. The Sharpe is now showing 3.64.
  • AiQuant Pro went live with client funds in October 23. Eight months later it is on course to achieve its 2023 return of of 50.9% net of fees, in the first 12 months of live trading.

As I have pointed out previously, we don’t make money every month but we do continue to trade within the statistical probability that our simulations expect. Both of these strategies were designed to provide good risk adjusted returns annually, whilst eliminating the large draw downs associated with crypto investing and I am delighted to say they continue to do just that. 

Crypto may now be tied to macro economic conditions but as long as we continue to outperform traditional finance on a risk adjusted basis, then we will continue to attract capital to the marketplace. 

Our Quant Pro custody model is still the only investment vehicle available in Crypto that significantly mitigates exchange and management counterparty risk whilst providing complete trading transparency.