In the dark days before Christmas, while contemplating my Bitcoin strategy for 2021, I asked myself the question which options are available. I came up with three different strategies; (1) Buying Bitcoin trackers, (2) Buying trading bots that have Bitcoin as basecoin and (3) Buying USDT based single coin trading bots that trade Bitcoin. All three strategies are contrasted against holding bitcoin on Binance (the yellow line in all charts).
First category: Bitcoin trackers
Bitcoin trackers invest your money in Bitcoin and do not touch it until you decide to sell. They promise to follow the price of Bitcoin 1:1. I purchased 3 trackers:
- The Big Friendly.bot:
According to the botcreator, The Big Friendly.bot is the easiest way there is to buy Bitcoin. As soon as you start the bot, it invests in the mother of all crypto currencies: Bitcoin. Once this is done, it does not touch the investment at all.
- Bitcoin XBTE Bitcoin Tracker EUR XBT Provider (SE0007525332)
The certificates provide exposure to the performance of the digital currency bitcoin by synthetically tracking performance of the price of bitcoin (BTC/USD) less a fee. (More info: https://coinshares.com/etps/xbt-provider/bitcoin-tracker-euro)
- VanEck Vectors Bitcoin ETN (DE000A28M8D0):
This Exchange Traded Note (ETN) gives direct access to the largest and most liquid of cryptocurrencies: bitcoin, 100% backed by bitcoins, stored in cold storage with a regulated custodian with crypto insurance (limited amount coverage) Tradable as an ETF with Deutsche Boerse Xetra. (More info: https://www.vanecketfs.nl/producten/VanEck-Vectors-Bitcoin-ETN/32/overzicht)
The results over the last 2 months are not very surprising.
As expected all three trackers follow the price of Bitcoin very closely. Only disadvantage of the two listed trackers is that you are not able to trade outside the stock market opening hours. This can be a big risk as you can’t protect yourself against price drops after closing of the stock market or during weekends. Cryptocurrency markets are always “on”, with 365/24/7 trading activity. In the event of a crash of the cryptocurrency market on Friday evening, you can only intervene on Monday morning.
The Big Friendly.bot can always be sold as the Bots platform strives to be open and functional 24/7.
Second category: Bitcoin based trading bots
These trading bots have Bitcoin as their base coin and should multiply their value in Bitcoin through trading Bitcoin-pairs. I selected three bots for my comparison.
- CBS by Altrady:
A unique algorithm that works by automatically analyzing the market history for each available market, checks current prices against previous support levels and will ensure the bot buys low and sells high.
- Thunderbird by Dagobert Buck:
This trading bot focuses on BTC pairs (BNB, ETH, LTC, AION, ALGO, ANKR, ARPA and ATOM) and tries to predict the future of a pair by estimating the USDT components. So BNBBTC is predicted by looking at BNBUSDT and BTCUSDT.
- DeFi Strategy by Dagobert Buck:
This trading bot focuses on the top 10 currencies in the world of Decentralized Finance (DeFi). The currencies are LINK, LEND, MKR, SNX, COMP, YFI, ZRX, REN, KNC and BAND. It uses the same strategy as Thunderbird, trying to predict the future of a pair by estimating the USDT components.
Two of the bots have been following the pricetrend of their basecoin Bitcoin, hence have not been trading much, at least not successfully. The third bot has lost value to Bitcoin through its trades. None of the bots have been able to make money through successful trades.
This goes for most of the bots on the Bots platform that do not have a stable coin (USDT) as their basecoin, but a coin like Bitcoin, Ethereum or BNB. When looking at their performance in crypto currency, most show a negative result. The bots are not able to successfully trade, and multiply the amount of basecoin you have invested in. The stellar results in euro as shown in the app are caused by even more stellar results of their basecoin.
Although most (unaware) users are happy with the results of these bots, and Revenyou is proudly using these results in there marketing stratgies, investing in a tracking bot that follows the pricetrend without intervening or investing directly in the coin (not through a bot), would have resulted in a higher gain.
Third category: USDT based single coin trading bots that trade Bitcoin
These trading bots have stable coin USDT as their basecoin and try to multiply their value by trading Bitcoin. I selected two bots for my comparison.
- Himalaya by Boosting Alpha Netehrlands:
A moderate and stable bot that only trades in Bitcoin. Through its cautious approach it tries to participate in winning prices and to stop in time at falling prices.
- Sweet Orange Mia by Team Agga Technologies:
This trend trading bot trades in Bitcoin and was created to focus only on the greater benefits of the crypto market. The bot will stop trading if the market is stagnant.
These bots will not gain as much as Bitcoin, but are designed to hold on to their profits in declining markets. Two months is too short a period for reviewing or judging these bots, especially in the growing market we have experienced for the past two months. Although the chart shows that the bots were able to hold on to gains when Bitcoin prices fell, and even outgain Bitcoin in certain instances, the overall gains in two months are half of the Bitcoin gains.
Unlike trackers and BTC based bots, these trading bots will exit declining markets themselves and hide in their stable coin to protect gains. Less risk, more ease of mind for the owner.
A fourth strategy which I have started in the beginning of February is trading Bitcoin myself on Binance. Together with a friend I am developing a strategy to multiply the amount of Bitcoin through trading in BTC pairs (more or less simular to category two described above). Our goal is to earn more bitcoins and to profit from rising Bitcoin prices. If you don’t have the time, knowledge or interest in developing your own trading strategy another option is copy trading, where you can automate your Bitcoin trades using signal providers.
Let me know through the comments if you know of any other strategy, if you have other experiences with the strategies described above, or if you have any other comments or additions.
2 Replies to “Different ways to invest in Bitcoin compared”
Dankjewel voor deze analyse. Het helpt mij enorm om een goede keuze te maken tussen verschillende assets.
Fijn om te lezen Rein. Daar doe ik het voor.