4 Months of Crypto Trading Bots performance compared to holding Top 20 crypto coins

A month ago I posted a 3 month comparison between my crypto trading bots portfolio and a portfolio in which I’m holding 20 different crypto currency  coins. The goal is to see if the trading bots can outperform the crypto currency market.

3 Months of Bots performance compared to a Top 20 coins HODL

Now, with a month of extra data, the picture should become clearer. Are the crypto trading bots able to generate a higher revenue than the crypto currency market? Firstly let’s have a look at where we left of last month.

Bots vs Top20Coins HODL
3 month performance of crypto trading bots (blue line) and holding rhe Top 20 crypto coins (orange line)

Due to a booming November month the Top 20 crypto currency coins portfolio (orange line in the chart) turned an average loss into a 12,65% average profit (Nov. 23rd), and closed in on the result of the portfolio of crypto trading bots (blue line) of 14,76%.

What happened in the period of Nov. 24th until Christmas? The results are in the chart below.

4 month performance of crypto trading bots (blue line) and holding rhe Top 20 crypto coins (orange line)

As you can see the last month has been a period of great volatility. The results over the past 4 months are as follows (3 month results):

  • Portfolio of crypto trading bots: +16,34% (14,76%)
  • Portfolio of Top 20 crypto currency coins: +7,33% (12,65%)

The crypto trading bots have been able to gain while the average value of the crypto currency coins lost more than 5% in value. The outperformance of the trading bots is 9% over the 4 month period.

A good way to be able to compare both portfolios even better is to use the Sharpe ratio. The Sharpe ratio was developed by Nobel laureate William F. Sharpe and is used to help investors understand the return of an investment compared to its risk. Risk in this case is equal to volatility. A portfolio with a high degree of volatility is riskier than a portfolio with lower volatility. High volatility brings with it chances of higher profit but also chances of higher loss.

  • The Sharpe ratio adjusts a portfolio’s past performance for the excess risk that was taken by the investor.
  • A high Sharpe ratio is good when compared to similar portfolios or funds with lower returns.

In the chart below we see the Sharpe ratio of the crypto trading bots portfolio represented by the blue line and the portfolio of 20 crypto currency coins represented by the orange line.

Sharpe ratio of the portfolio of crypto trading bots (blue line) and the portfolio of 20 crypto currency coins (orange line)

The conclusion that can be drawn from the higher Sharpe ratio of the crypto trading bots portfolio is that their risk-adjusted return is also better than when simply holding 20 crypto currency coins during the last 4 months.

Next month in a new update we will see if the trading bots can build on their outperformance or if there is another boom in the crypto currency market which makes a simple coins hold more favorable. If you have any questions or suggestions don’t hesitate to comment.