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February ’24 Newsletter

Dear TuringTrader Member,

January has been a good month for investors, and the market sentiment seems to be quite bullish. But January has also been remarkable, because, after years of negotiation, the SEC approved Bitcoin spot ETPs. With these ETPs available, our main complaints regarding cryptocurrencies have been eliminated, and it is time to take a closer look at these newly available assets.

I found a total of 28 exchange-traded products concerned with cryptocurrencies. And while ETFs tracking common stock market indices, e.g., the S&P 500, are all very much the same, the landscape for crypto-ETPs is significantly more diverse. In broad strokes, there are the following categories:

  • ETPs investing directly in cryptocurrencies
  • ETPs investing in cryptocurrency futures contracts
  • ETPs investing in businesses involved with cryptocurrencies

I wrote a background article looking at these categories in more detail. Time will tell which one of these will be the most successful and provide enough liquidity for tactical asset allocation. In the meantime, I will start researching how we can trade cryptos.

Bitcoin Monte Carlo Simulation

Ultimately, there are two issues of concern: volatility, and availability of historical data. Our unique Monte Carlo simulations show that, if we are looking for 95% confidence, Bitcoin has a break-even time of about seven years, which is about the same as for the stock market. However, the time to recover from major drawdowns reaches about eleven years. That’s a long time – especially when compared to the available price history reaching only back to May 2013. It remains to be seen whether this historical data is sufficient for understanding the cycles this asset undergoes and creating effective trading strategies.

In any case, we are kick-starting our development of a crypto-strategy and hope to release something meaningful later this year. For now, we are working on some usability improvements of the site, which we have planned to unveil in March.

As always, I want to thank everybody who reached out over the past month with questions, comments, and suggestions. It is an honor to have you on our site. If you like what we do, support our growth by sharing with your friends how TuringTrader adds value for your investing.

Stay tuned for further updates,
All the best

Felix

Felix Bertram
Founder of TuringTrader.com

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