Now that Revenyou has come up with their own Bots League (you are welcome for the idea) it is time to publish the final results in my Battle of the Bots league.
In the Battle of the Bots series I have compared the performances of various crypto trading bots (see previous blogs for an explanation and a description of the competing bots. Link at the end of this post). The monthly results of three series of battles between three trading bots of different botcreators could help in deciding which bots or botcreators to choose.
Here are the final results.
Battle of the Bots 1
Top10 Balance 2 bot +163,02%
Sweet Orange Mia bot +63,35%
Power of Pi bot +22,33%
Battle of the Bots 2 (in crypto value)
Joe Daredevil bot +6,36%
DeFi Strategy bot -8,30%
CBS by Altrady bot -26,50%
Because DeFi Strategy bot and CBS by Altrady bot have Bitcoin as their basecoin, and Bitcoin has increased in value over the past three months, these trading bots have increased more in euro value than their USDT based counterparts. USDT (US Dollar stablecoin) has decreased in value compared to the euro.
Why should I invest in crypto trading bots? Why not open an account on a crypto exchange and trade in crypto currency myself? Okay, maybe trading by myself is not the smartest option. It takes a fair amount of time, knowledge, skill and steel nerves to trade successfully. Even more so when trading cryptocurrency.
But what about buying a selection of larger cryptocurrency coins, and just hold them for a longer period of time? The cryptocurrency market is in an upward trend, so my portfolio will grow automatically. And I guess it will gain more than crypto trading bots are able to realize.
This was my line of reasoning in July/August 2020 when I saw cryptocurrencies gain 50-60-70% in a matter of weeks, while my trading bots only gained 15-20-25%. Time for some research.
I opened two accounts on crypto exchange Binance. One for the Top 10 cryptocurrency coins, and one for cryptocurrency coins 11-20, and started tracking and comparing the value of my Binance portfolios with my selection of 20+ crypto trading bots. An exiting venture, every evening after dinner entering the current position in Excel and seeing the charts develop. In this blog I want to share the results over the past 5 months.
Looking at the cryptocurrency market over the past 5 months, the first 3 months (mid-August to mid-November) show a sideways to slightly negative trend. Results vary between 0 and -20%. The last 2 months (mid-November to mid-January) show enormous growth, with the larger cryptocurrencies (Bitcoin, Ethereum) gaining up to 200%.
A good way to follow the development of the broader cryptocurrency market is through the CMC Crypto 200 Index.
Because Bitcoin has a market dominance of 67% the crypto 200 index is also published without BTC (EX-BTC):
Both charts show that the cryptocurrency market didn’t gain much in the first 3 months, but doubled in value over the last 2 months. My charts show the same picture. The charts underneath show the results of my collection of crypto trading bots (blue line), my Top10 crypto coins portfolio on Binance (orange line) an my Top 11-20 crypto coins portfolio on Binance. The first chart shows the results in Bitcoin, the second one in euros.
Due to the enormous value increase of Bitcoin, the value of all three portfolios in BTC has decreased. Expressed in euros all three portfolios show an increase in value. In percentages:
Top10 coins portfolio on Binance: +88,6%
Crypto trading bots portfolio: +55,8%
Top11-20 coins portfolio on Binance: +40,1%
Let’s zoom in on the performance comparisons of the Crypto trading bots against the Top10 coins and against the Top20 coins (adding Top10 and Top11-20). First Bots (blue line) vs Top10 (orange line).
The 15 day moving averages show a better result for the Crypto trading bots (yellow moving average line) in the first three months compared to the Top10 coins (light blue moving average line). The Top10 coins lose up to 20% in value in this period, while the trading bots drop a maximum of 5%. Around day 96 the moving average lines cross. In the last two months the Top 10 coins have a clear advantage. What is striking is the difference in volatility. The trading bots show a more controlled price trend than the Top10 coins. Top10 coins is showing deeper valleys and higher peaks.
Let’s have a look at Bots (blue line) vs Top20 (orange line).
As seen before, Top11-20 coins didn’t perform as well as Top10 coins. Adding the results shows an almost identical performance for the trading bots (yellow moving average) and the Top20 coins (light blue moving average line). Again, the greater volatility of the value of the Top20 coins portfolio compared to the trading bots portfolio is striking.
So the question remains: Should I invest in crypto trading bots or should I buy a selection of cryptocurrency coins, and just hold them for a longer period of time? The above data suggests that a selection of larger volume coins is performing better. Or does it? Volatility is not what most investors are looking for. A controlled profit with the least possible risk is preferable. If the cryptocurrency market undergoes a correction, the fall of prices will be better controlled by the trading bots. But how do we take risk or volatility out of the equation and get a fairer comparison?
The answer is 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.To briefly summarize the usefulness of the ratio:
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 ratios.
A higher Sharpe metric is always better than a lower one because a higher ratio indicates that the portfolio is making better investment decisions and not being swayed by the risk associated with it. Sharpe ratio grading thresholds are commonly interpreted in the following way:
<1: Not Good
1 – 1.99: Ok
2 – 2.99: Really Good
To calculate the Sharpe ratio we need a risk-free rate of return. This is the return on an investment with zero risk, meaning it’s the return investors could expect for taking no risk. The yield for a U.S. Treasury bond, for example, could be used as the risk-free rate. In my calculations I used T-bonds or Treasury bonds. Treasury bonds are fixed-rate U.S. government debt securities with a maturity range between 10 and 30 years. I used the 10 year bonds.
The following chart represents the Sharpe ratios of the three portfolios, Crypto trading bots (blue line), Top10 coins (orange line) and Top20 coins (yellow line).
Let’s zoom in on the last two months.
The results in percentages:
Crypto trading bots portfolio: 3,52
Top10 coins portfolio: 3,20
Top20 coins portfolio: 3,16
The ROI (return on investment) of all three portfolios can be classified as exceptional. But when taking volatility out of the equation the portfolio with the highest Sharpe ratio after 5 months of comparing is the crypto trading bots portfolio.
The conclusion for now: if you like taking risk and you don’t mind the volatility, holding the larger volume coins (Top10) can bring you a higher return. The more responsible investor is better off with a broad selection of crytpo trading bots that will manage your assets with less risk. Based on the (preliminary) results they achieve a higher result over a longer period in a volatile market such as cryptocurrencies.
My last update on the single coin crypto trading bots, trading Bitcoin and Ethereum. Bitcoin has passed the 40.000 USD mark to a new all time high. Ethereum tried to tap the 1300 USD boundary. How are the bots that trade in these coins performing?
In percentage (27 Dec.):
Bitcoin (green line): +274,51% (+154,84%)
Himalaya by botcreator Boosting Alpha (blue line): +88,26% (+50,60%)
Sweet Orange Mia by botcreator Agga Technologies (orange line): +73,69% (+31,63%)
Dr Block 2 by botcreator Rave before the machine (yellow line): +38,77% (+31,62%)
Dr Block by botcreator Rave before the machine (grey line): +26,47% (+25,71%)
In percentages (27 Dec.):
Ethereum (blue line): +258,69% (+96,88%)
Refreshing Grey Mia by botcreator Agga Technologies (grey line): +122,40% (+22,70%)
Dr. Spock by botcreator Rave before the machine (orange line): -8,93% (-12,81%)
I have decided to sell Dr. Spock and reinvest the money in another bot. Therefore this will be the last performance comparison for the Ethereum trading bots.
For the Bitcoin bots I have started tracking the performance of Bitcoin and a number of Bitcoin related instruments , being:
Bitcoin Tracker EUR XBT Provider ETF
VanEck Vectors Bitcoin ETN
The Big Friendly bot (USDT based “bot” investing all its funds directly in Bitcoin)
Thunderbird bot (BTC based bot focusing on trading 8 BTC pairs)
DeFi Strategy bot (BTC based bot trading in the top 10 coins in the world of Decentralized Finance)
CBS bot (BTC based bot trading all available markets)
Himalaya bot (USDT based bot trading only in BTC)
Sweet Orange Mia bot (USDT based bot trading only in BTC)
The new comparison will try to answer the question which instrument is the most profitable, taking risk into account. Bitcoin trackers (1-3), BTC based bots (4-6) or USDT based bots trading BTC (7-8). The comparison will replace the current performance comparison. Keep posted for the first blog.
In the Battle of the Bots series I will compare the performances of various bots. The monthly results of three series of battles between three trading bots of different botcreators will be posted for the next year. The goal is to evaluate the bots performance over a longer period of time, both in winning as well as in decreasing crypto currency markets.
In the third battle a long time favorite of many bots-users will compete against two BTC based bots. What difference does the base coin make?
JoeDaredevil by Boosting Alpha: This bot invests in 18 high volatility coins, lesser known coins with lower market volumes. Therefore it targets a relatively high profit potential. Estimated annual return is 129%. Risk level according to the bots app is 9/12. Basecoin USDT.
CBS (CryptoBaseScanner) by Altrady: The oldest bot on the platform. A unique algorithm that works by automatically analyzing the market history for each available market, checking current prices against previous support levels so that the bot buys low and sells high . Testing results predict a 36% return on investment (ROI). A risky bot according to the bots app, 10/12. Basecoin BTC.
DeFi Strategy by Dagobert Buck: The bot focuses on the Top 10 coins in the world of Decentralized Finance (DeFi), a strong emerging submarket within crypto with a lot of growth potential. It targets a ROI of 70% per year. The bots app rates it as a high risk bot with risk level 11/12. Basecoin BTC.
The following chart shows the results of the three bots over the past two months.
JoeDaredevil, represented by the blue line, has been able to increase the amount of base coin, being Theter (USDT), while CBS (grey line) and DeFi strategy (orange line) have had a hard time finding and trading coins that outperformed their base coin BTC. It looks like CBS traded a coin that has experienced a free fall, losing more than 25% overnight (was it XRP?). Unfortunately the botcreator cannot give a clarification. Altrady’s reaction:“Unfortunately I cannot provide an answer myself because I do not receive any feedback from RY as to which signals have or have not been sold. I also suffer from it. I lost 30% in one night.”
Because of the rapid growth of BTC, the chart in euro view gives a completely different picture.
Final score after two month in basecoin (result after one month):
JoeDaredevil by Boosting Alpha : +17,16% (+10,85%)
DeFi Strategy by Dagobert Buck: -7,89% (-6,05%)
CBS by Altrady: -22,07% (+0,06%)
Final score after two month in euro (result after one month):
DeFi Strategy by Dagobert Buck: +85,38% (+27,75%)
CBS by Altrady: +56,92% (+36,07%)
JoeDaredevil by Boosting Alpha : +11,49% (+7,12%)
2020 has clearly been a very good year for Bitcoin, and therefore for trading bots with Bitcoin as their basecoin. Because of the enormous increase in value of Bitcoin (today’s value is almost 4 times last year’s value), the value in euro’s of BTC based bots has seen enormous increases as well.
The US dollar on the other hand (and with it USDT as the US dollar based stablecoin) has decreased almost 10% in value last year, compared to the euro. This is discounted in the results of trading bots based on the stablecoin, which can be seen if you compare above results for JoeDaredevil (17% in USDT vs 11% in euro).
The question remains if BTC based bots will perform as well with a decreasing Bitcoin. They should be able to make better trades if coins they trade catch up the 2020 losses against the Bitcoin. But they will not be able to surf Bitcoin’s increasing value any longer. USDT based bots will benefit from a rebounce of the US dollar. For now, looking at euro value, BTC based bots are the winners of 2020.