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July ’24 Newsletter

Dear TuringTrader member,

It’s July and summer is finally here – even in Seattle. Half of the year has gone by so quickly, and it is finally time to make good for a promise we made back in February: A crypto strategy.

TuringTrader's Hot Sauce strategy: cumulative returns and drawdowns

Hot Sauce

In January, the SEC approved a list of Bitcoin spot ETFs. It’s been a very competitive landscape since, and the winners and losers become evident now. Here are the four most successful ETFs, sorted by their daily trading turnover:

  • IBIT – iShares Bitcoin Trust: Daily turnover ~$625M
  • FBTC – Fidelity Wise Origin Bitcoin Fund: Daily turnover ~$280M
  • BITO – ProShares Bitcoin Strategy ETF: Daily turnover ~$120M
  • GBTC – Grayscale Bitcoin ETF: Daily turnover ~$100M

With that, these ETFs easily reach the liquidity of stocks in the S&P-100, which shows that they are well-suited for tactical strategies.

Our Hot Sauce strategy uses a novel trend-following approach. It solely relies on price-action to determine the asset’s direction but uses the asset’s correlation with well-known market-moving risk factors as auxiliary inputs to size its positions. We tested this concept with many assets including stocks, bonds, commodities, and gold, and were thrilled to find that it adds value with all of these asset classes and without the need for additional parameter tweaking. We hope to use this framework for more strategies moving forward.

Performance wise, Hot Sauce far outperforms Mach-3, which so far has been our most aggressive strategy. But where there is light, there is also shadow. Even with tactical management, Bitcoin remains extremely volatile and poses outsized investment risks. This strategy is certainly not meant to be the main event. Instead, we suggest members apply it sparingly, to add a little kick to an otherwise well-rounded portfolio: just like you would use hot sauce on your favorite dish.

In the near term, we will experiment with integrating Hot Sauce with a new release of All-Stars Leveraged, to demonstrate what we believe sensible use would look like. But that’s a topic for a later newsletter. In the meantime, we’d like to hear your opinion: how would you use a strategy like this?

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 Bertram
Founder of TuringTrader.com



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