Different ways to invest in Bitcoin compared

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.

Battle of the Bots – Final results

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

  1. Top10 Balance 2 bot +163,02%
  2. Sweet Orange Mia bot +63,35%
  3. Power of Pi bot +22,33%

Battle of the Bots 2 (in crypto value)

  1. Joe Daredevil bot +6,36%
  2. DeFi Strategy bot -8,30%
  3. 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.

Battle of the Bots 2 (in euro value)

  1. DeFi Strategy bot +123,42%
  2. CBS by Altrady bot +79,07%
  3. Joe Daredevil bot +2,18%

Battle of the Bots 3

  1. Beetlejuice bot +62,33%
  2. Botzilla bot +5,81%
  3. Dr. Block bot +3,55%

Best crypto trading bots top 3

  1. Top10 Balance 2 bot by Dembots +163,02%
  2. Sweet Orange Mia bot by Agga Technologies +63,35%
  3. Beetlejuice bot by The Noogieman +62,33%

Best euro earning bots top 3

  1. Top10 Balance 2 bot by Dembots +152,79%
  2. DeFi Strategy bot by Dagobert Buck +123,42%
  3. CBS by Altrady bot +79,07%

Performance of single coin Ethereum and Bitcoin trading-bots – final update

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.):

    1. Bitcoin (green line): +274,51% (+154,84%)
    2. Himalaya by botcreator Boosting Alpha (blue line): +88,26% (+50,60%)
    3. Sweet Orange Mia by botcreator Agga Technologies (orange line): +73,69% (+31,63%)
    4. Dr Block 2 by botcreator Rave before the machine (yellow line): +38,77% (+31,62%)
    5. Dr Block by botcreator Rave before the machine (grey line): +26,47% (+25,71%)

In percentages (27 Dec.):

    1. Ethereum (blue line): +258,69% (+96,88%)
    2. Refreshing Grey Mia by botcreator Agga Technologies (grey line): +122,40% (+22,70%)
    3. 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:

  1. Bitcoin Tracker EUR XBT Provider ETF
  2. VanEck Vectors Bitcoin ETN
  3. The Big Friendly bot (USDT based “bot” investing all its funds directly in Bitcoin)
  4. Thunderbird bot (BTC based bot focusing on trading 8 BTC pairs)
  5. DeFi Strategy bot (BTC based bot trading in the top 10 coins in the world of Decentralized Finance)
  6. CBS bot (BTC based bot trading all available markets)
  7. Himalaya bot (USDT based bot trading only in BTC)
  8. 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.

Battle of the Bots pt. 1 update

In the Battle of the Bots series I will compare the performances of various crypto trading bots. The monthly results of three series of battles between three 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 first battle the following trading bots are competing.

  • Power of Pi by Boosting Alpha: This bot scans 7 different coin markets using the mysterious constant value Pi in it’s algorithm. The bot has a calculated cumulative return in 24 months of 94% with a high volatility risk according to the botcreator. Risk level according to the bots app is 8/12.
  • Top 10 Balance 2 by Dembots: A long term steady bot which checks top performing coins with the highest volume every last 30 days. A concept similar to some well proven ETF strategies. The bot won’t win on big spikes, but if the market wins, you win. A high risk bot according to the bots app, 11/12.
  • Sweet Orange Mia by Agga Technologies: A balanced long term risk strategy that only trades Bitcoin. It trades on a small and medium timeframe to ensure it’s ability to react smoothly to moving market trends. Yearly testing results predicted a 2020 performance of 89,47%. A mild risk bot according to the bots app with risk level 8/12.

The results of these three bots after two months is represented in the following chart.

In the chart the blue line represents Power of Pi, the orange line Top 10 Balance 2 and the grey line Sweet Orange Mia.

The score after two months in percentages (score after one month):

  1. Top 10 balance 2 by Dembots: +58,73% (+45,23%)
  2. Sweet Orange Mia by Agga Technologies: +23,07% (+8,26%)
  3. Power of Pi by Boosting Alpha: +14,45% (+6,16%)

In the growing crypto market all three bots have taken advantage and been able to increase the value of their investment over the past month. Top 10 Balance 2 is “always on”, always in position, and dependent on performance of the Top 10 coins. It has benefited from the growth of bitcoin and ethereum, but suffered from the decline of ripple. Sweet Orange Mia and Power of Pi take to the sidelines when their algorithms suspects a decline, as can be seen by flatline periods in the chart. They should be able to protect profits better in case of a downtrend in the crypto market, hence their lower risk profile. The future will tell which bot performs best, and if they are able to live up to the promises of their predicted annual  results of 90%.

Tomorrow an update of the second battle of three bots.

Performance of single coin Ethereum and Bitcoin trading-bots update 2

A new bi-weekly update on the performance of the Bitcoin and Ethereum crypto trading bots on the Revenyou Bots platform. This blog adds two weeks of data to the last update found here.

Performance of single coin Ethereum and Bitcoin trading-bots update

Bitcoin has been on an exeptional bullrun rallying more than 45% in value in the past two weeks to more than $28.000. If we compare that run to the performance of the Bitcoin crypto trading bots we see the following results.

Performance Bitcoin and BTC Bots

In percentage (2 weeks ago):

    1. Bitcoin (green line): +154,84% (+72,33%)
    2. Himalaya by botcreator Boosting Alpha (orange line): +50,60% (+28,82%)
    3. Sweet Orange Mia by botcreator Agga Technologies (blue line): +31,63% (+14,12%)
    4. Dr Block 2 by botcreator Rave before the machine (yellow line): +31,62% (+27,88%)
    5. Dr Block by botcreator Rave before the machine (grey line): +25,71% (+19.03%)
  1. Although all bots have been able to add value, the differences are remarkable. Just like in my last blog where I compared the performance of my portfolio of crypto trading bots to a holding portfolio of crypto currency coins, I want to use the Sharpe ratio to help understand the return of the investments compared to their risk. 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 returns.

Comparing the Sharpe ratio’s of Bitcoin and the BTC trading Bots provides a fairer picture of the performance. The results are represented in the following chart.

Sharpe ratio Bitcoin and BTC Bots

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
    • >3: Exceptional

With Sharpe ratio scores ranging from 2,96 to 4,46 the Bitcoin trading bots have shown very good to exceptional results. Bitcoin however, with a Sharpe ratio of 10, is in a league of its own.

Finally the chart for Ethereum and the ETH trading bots.

Performance of Ethereum and ETH Bots

Ethereum is showing very strong growth in value over the past two weeks. The ETH trading bots show a varied picture. In percentages (2 weeks ago):

    1. Ethereum (grey line): +96,88% (+58,45%)
    2. Refreshing Grey Mia by botcreator Agga Technologies (blue line): +22,70% (-1,22%)
    3. Dr. Spock by botcreator Rave before the machine (orange line): -12,81% (-12,05%)

Refreshing Grey Mia has performed very well and turned its loss into a good profit. Dr. Spock has fallen further and is waiting for an update by the botcreator.

As noted in previous blogs, the crypto trading bots are looking for an outperformance by holding on to accumulated profits in a declining market. So far they have had no chance to do so. I will continue to compare the results of the crypto trading bots to the performance of their coins to see if outperformance is possible in the longer run.