Every month, we publish performance reports for our strategies. In this article, we dive into Wise: ETH, from April 21 to July 21. What did the market for ETH look like over this period? How did Wise: ETH react to price fluctuations? Keep reading to find out.
What’s Wise: ETH?
Wise: ETH trades on Ether (ETH), the token emitted by blockchain-based software platform Ethereum. It’s a long-term, long-only strategy (i.e it only buys, and never short-sells) that follows the uptrend on ETH. Wise: ETH aims to capture positive trends on ETH, and switches to neutral during periods of downtrend.
It does so thanks to the combination of three strategies: two medium term (weekly and daily) tracking strategies and one contrarian strategy. The tracking strategies buy ETH when they detect a rise in price above a given trend indicator. The contrarian strategy buys the crypto when it’s trading at lower levels.
To learn more about Wise strategies, check out our article “What’s a Wise Strategy?”
Any Market News to Share?
It’s been a busy three months for ETH and the crypto market as a whole. They both suffered from the LUNA crash and Celsius’s default in June. Add macro concerns over the acceleration of inflation in the United States and a spike in long term yields, and you get a pretty sour mix.
However, ETH recovered in July following two pieces of news. The FED announced some easing on long-term interest rates. Ethereum shared it planned to launch the Merge: the platform’s switch from Proof-of-Work to Proof-of-Stake protocols, in September.
What About Wise: ETH ?
Wise: ETH was quick to react to shocks in May/ June and benefited from the bullish trend in early July.
Source: HAL, CoinShares – Past performances are not a reliable indicator for future performance. Capital is at risk.
The bot unwound its positions on May 5, right before LUNA’s crash on May 9, and again June 3, before Celsius’s liquidity issues on June 13. This allowed it to neutralize its exposure to the two drawdowns that led ETH’s to value drop for $3,000 to $1,000.
On the contrary, Ethereum’s announcement in July that the long-awaited Merge would happen this coming September, was the starting point for a 40% hike in price. The bot took full exposure on July 6, and the price rally to $1,500 started on July 13.
This flexibility helped Wise: ETH outperform its underlying asset. Wise: ETH had a positive return of +20.13%, while ETH’s value dropped by -49.86% over the same time period (April 21-July 21).
Wise: ETH outperformed ETH by 68%. This shows the interest of following a dynamic strategy, that unwinds before crashes and regains positions once the market rebounds, compared to a “buy and hold” approach.
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 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.