How does HAL’s Dynamic Strategy Work?
Dynamic is a meta-strategy. This means it combines several strategies – 13 in Dynamic’s case, all built in-house by CoinShares’ team of quant analysts and expert crypto traders.
Source: HAL, CoinShares – Past performances are not a reliable indicator for future performance. Capital is at risk.
Some of the strategies it includes are:
- Long-only strategies, such as Wise. These strategies switch to neutral in periods of downtrend.
- Long-short strategies, such as Pulse. These strategies strive to attain a positive result, whatever the market conditions are (uptrend or downtrend).
- Low-volatility strategies, trading on BTC, ETH, BNB and ADA. They are short-term trend following strategies aimed at limiting performance volatility.
- Artificial Intelligence (AI) Pick. A multi-coin strategy using a deep learning technology, in order to process a wealth of data and make complex decisions.
As a result, Dynamic is a long/short strategy. It can open long (buy) and short (sell) positions, which allows it to benefit from the uptrend and the downtrend.
Dynamic also opens up access to strategies that are not individually available on HAL, such as the low-volatility strategies and Pulse BNB.
Dynamic trades on 4 cryptos, both blue-chips (BTC, ETH) and two prominent alt-coins (BNB, ADA). The hourly signal for each coin is designed to reach a target volatility of 50%, through a risk-control mechanism. This mechanism calculates the allocation weight of the coins and modulates their respective signals to achieve a predetermined volatility target.
As its name implies, Dynamic is not a passive strategy. On the contrary, it diversifies its allocation to follow the dynamics of the market and benefit from short-term ranges. Its exposure is not set once and for all but has the potential to reduce and increase each hour if the trend is too strong or too weak. It’s a hybrid strategy: 85 % trend-following (through the Wise, Pulse and Low Volatility strategies) and 15 % Artificial Intelligence (AI) Pick.
This makes Dynamic an evolutive strategy, that combines all 13 strategies at any given time, in order to take into account a significant number of diverse indicators before placing trades.
Dynamic Strategy: Performance
Dynamic’s performance for the past year (28 September 2021 – 28 September 2022) stands at -27%. However, while this is a negative figure, Dynamic still outperformed its underlying assets by far, with respective returns of -55% for BTC, -55.17% for ETH, -26.92% for BNB and -79.23% for ADA. This is in line with the strategy’s objective to limit volatility.
2 main periods can be drawn out:
- October – March: the strategy followed the trend on BTC. After a spike at +26% in November, Dynamic ended the period with a negative performance of -15% – underperforming BTC by 10%. Although the strategy followed the upward movement of the market, it did not benefit from it fully and suffered from the subsequent drop.
- May – mid-August: the strategy recovered part of its losses thanks to a positive performance (+26% on the period, whereas BTC exhibited a negative return of -50,50%). As a result, it clearly outperformed BTC (+76.50%). This performance is due to a beneficial market exposure from mid-June to mid-August on BTC and especially ETH, which more than doubled in value over the period.
That being said, keep in mind that capital is always at risk and that past performance are not indicative for future results.
What Sets Dynamic Apart From Other HAL Strategies?
Dynamic is a multicoin strategy which combines several strategies, allowing it to be always active on the market. Integrating long-only and long-short strategies makes for a very diversified portfolio. In addition, the volatility-target mechanism helps dynamically control risk.
When you choose this strategy, you benefit from a complex trading approach that strives to balance returns with risks. However, Dynamic is not immune to global market trends, as we saw this past year.
Looking to give Dynamic a try? If you already are an HAL aficionado, it only takes a few clicks to allocate funds to a strategy on your dashboard.
Disclaimer:
Investing involves risk, including the possible loss of all the money you invest. In particular, crypto-assets are a highly volatile and speculative asset class. HAL is only suitable for traders who are willing to bear the risk of loss and experience sharp drawdowns. Past performance is not necessarily a guide to future performance. The performances presented are real performances calculated net of execution fees and slippage from a proprietary Binance account.
The purpose of this material is to provide objective, educational and interesting commentary and analysis on developments in the crypto-assets sector. Nothing in this material should be interpreted as constituting an offer of (or any solicitation in connection with) any investment products or services by any member of the CoinShares Group where it may be illegal to do so. Access to any investment products or services of the CoinShares Group is in all cases subject to the applicable laws and regulations relating thereto.