Technical analysis of crypto prices

**Bsims** · 08-10-19, 08:23 AM

I’ve done a lot of work on scenario 2. This approach looks at the 11 coins available for trading on Coinbase Pro. It takes the highest percentage gain from the previous day, sells some of the gains, then uses the funds to buy coins of the smallest gainer. I’ve discussed the effort on my blog (not allowed to post a link here). The final run iteration generated a detailed work spreadsheet. It can be download at http://bit.ly/2YBeJsr.

Bottom line is that in some scenario runs, this gainer-loser approach did outperform the buy and hold approach, but not often. I could not gain enough confidence to actually use this with my money. I will be moving on to developing scenario 3 and beyond. Message me if you wish to discuss this project or the data file.

**eaglesfan371** · 08-10-19, 08:48 AM

When one or more crypto owners can crash a market instantly, it is not liquid enough to offer sustainable technicals.

For example earlier today the 5% drop looked like one big player instantly cashing out. With that said, bollinger bands are one technical that I find works well on nearly every market.

You seem sharp, focus your quants on non-speculative markets.

There is a recent trend in recent year or two of having a negative beta to world markets. Especially in the Asian markets due to devaluation. When world markets drop, bitcoin rises. Instead of being a payment for service, currency, it acts more like a commodity now.

**Bsims** · 08-10-19, 02:12 PM

Originally posted by eaglesfan371

When one or more crypto owners can crash a market instantly, it is not liquid enough to offer sustainable technicals.
For example earlier today the 5% drop looked like one big player instantly cashing out. With that said, bollinger bands are one technical that I find works well on nearly every market.

That's the reason I am simulating different approaches over a year and a half of history. The technical methodologies may not work in the crypto market. If not, I'll just go to buy and hold. Then I'll go back to analyzing sports.

**raiders72001** · 08-10-19, 03:58 PM

I agree with eaglesfan. Technical analysis isn't for cryptos although there are others that claim they are making coin with technical analysis.

**Ro0k** · 08-12-19, 12:02 PM

https://www.youtube.com/channel/UChULbX89jjbCEDhGn56_yuw/playlists

This guy is legit and he teaches you trade TA that works across all markets. He still puts out videos on a regular basis going more and more in depth each time. I've found TA to be like tailing people gambling. The more people you tail, the more you'll lose. Stick to one. In the end, it's just weighing probabilities and managing risk.

**Optional** · 08-14-19, 05:54 AM

More fundamental analysis then technical but a couple of interesting comments from the latest Indepenentreserve.com newsletter I thought might interest this thread.

BTC dominating ALTs

Bitcoin is down 5% for the week but up 6% over the past month. Bitcoin dominance (ratio of bitcoin market capitalisation to alt coin market capitalisation) is up to levels not seen since May 2017. 'Altseason' looks further away than ever with the top ten coins heading backwards this week. Ether dropped 8%, Ripple lost 5%, Litecoin (-9%), and Stellar (-5%).

2020 Bitcoin Halving

If you're banking on a big increase in the Bitcoin price following the halving next year, it's worth taking a critical look at the Litecoin price, post halving. It's down 12% over the course of a week. Eric Turner, from the Messari blockchain analytics firm said: "Now that the halving is here, some investors are starting to exit the trade. Halvings tend to be priced in, so the event itself isn't the positive catalyst that many expect."

Brexit effect on BTC

Will Brexit - looking increasingly likely to occur on October 31 - put a rocket under the Bitcoin price? Nicholas Gregory from CommerceBlock thinks so. "A no-deal Brexit could see a massive and unprecedented breakout," he told The Independent this week.

**Bsims** · 10-07-19, 10:58 PM

I’ve finally gotten around to developing a 3^rd approach to looking at technical analysis leading to identifying buy and sell signals for trading bitcoins (BTC). The delay was caused by surgery and recovery in a nursing home. They cost me 2 months.

The 1^st two approaches included “buy and hold” and “trading alt coins”. “Buy and hold” appeared to be the better approach and will likely be the gold standard when it comes to trading strategies. I discuss this project in detail on a blog. I also create spreadsheets with many of the details of the results. These I can share with you.

This 3^rd approach uses a technique called Bollinger Bands (mentioned by eaglesfan371 earlier in this thread). If you look at the description of Bollinger Bands, you will notice that there are 2 parameters used to generate the high and low limits. One is the simple moving average (SMA) of the price over several previous days. Typically, 20 days are used. The other is a multiplier of the the standard deviation of the prices over the number of days. This is typically 2.0. So, if you start with the SMA over the previous 20 days and add 2 times the standard deviation to this you get the Bollinger upper limit (a sell signal). Likewise, if you subtract 2 times the standard deviation from the SMA you get the Bollinger lower limit (a buy signal).

I ran a simulator for each day starting with January 1^st, 2018 through September 30^th, 2019. I started with a balance of $10,000, equally split between cash and bitcoins. The final net worth of the account was $5,745. Clearly this was a losing strategy. There were some complications when a balance became negative. I did adjust the simulator to avoid this (described in my blog).

I ran the simulator with 3 different days (15, 20, and 25), and 3 different multipliers (1.5, 2.0, and 2.5). The results of the 9 combinations are in the spreadsheet http://bit.ly/2LUZpPy. The purpose was to see if changing these parameters had much impact. It did. One finished with a net worth of $7,851. A significant improvement, but still a loss. My conclusion was that there is some potential here. It's a simple matter of continuing to modify the simulator searching for a winner.

**Optional** · 10-09-19, 06:54 AM

Good to see you back.

**Bsims** · 10-09-19, 07:36 PM

The next step in Bollinger Band analysis was to expand the range of parameters used to run the simulator. The number of days ranged from 4 to 25. The standard deviation multipliers went from 0.3 to 2.5. The resulting net worth’s ranged from $795 to $8,126. Following are the top 10 results.

Net Worth	Days Desired	Std Dev Multiplier	#Trades	# Buys	# Sells
$8,126.41	15	1.7	195	101	94
$8,103.39	14	1.7	203	105	98
$8,023.37	13	1.7	210	108	102
$7,977.60	12	1.7	219	113	106
$7,974.25	7	2.1	218	113	105
$7,939.24	8	2.1	198	102	96
$7,904.43	14	1.9	173	89	84
$7,807.13	9	2.3	154	80	74
$7,799.28	16	1.7	190	97	93
$7,571.09	16	1.9	165	85	80

None of the combinations showed a profit since we started with $10,000. We’ll continue the search with further analysis. The full results are in the spreadsheet,

Dropbox

http://bit.ly/2IE1bCn

**Bsims** · 10-15-19, 08:56 AM

I have added to my analysys the impact that the market trend has on the Bollinger Band model. I looked at the results of 2018 (down year) and 2019 (up year). Bitcoin started 2018 started with a BTC price of $13,850 and ended at $3,747. It dropped rapidly early and was generally had a downward move. In 2019 it started at $3,747 and was at $8,327 on September 30^th. They are discussed in my blog. If you have questions or observations, message me or contact me on my gmail account, ole44bill. The results have been added to the summary spread sheet. It can be found at

http://bit.ly/33CgW4H

**Bsims** · 10-19-19, 08:15 PM

I have been posting links to some data files that pretty much contain the results of some analysis on bitcoin simulations. The effort is to use the daily price fluctuations to time trades. Most recently it has focused on Bollinger Bands. I've also documented the results on a blog. I've reached a decision point on continuing these efforts (not the analysis, just the sharing). One of the primary reasons for including bitcoin analysis was to generate some discussion (questions, ideas, suggestions, etc.). It has not happened. In fact, I don’t detect any interest in the blog or the files that I offer to share. So, it doesn’t make sense for me to take time away from actual analysis to continue posting. Therefore, I’m going to cease and spend my time in analysis. If you wish to comment or continue a discussion, message me, or contact me at ole44bill on gmail.