Machine Learning for Crypto Portfolio Management Case Study: Week 3

Wow! We thought the first week of the study was crazy, but things have only gotten more interesting. The Nomics ML strategy had some legendary price predictions while Bitcoin struggled to hold its value throughout the week.

Let’s not wait another moment. Here are the results from the last week and what we should expect for the week to come!

Reminder: The methodology for this study was first outlined in our previous article.

Follow the progress of this study on Shrimpy.

Week 2 Results

The study has only been running for two weeks so far, but every week so far has been a shocker! While the first week showed a strong preference for Bitcoin, the complete opposite was true this last week.

#1 Bitcoin

Bitcoin experienced some heavy losses throughout the last week. This was an abrupt change from the previous week where Bitcoin dominated the markets.

After the second week of our study, Bitcoin now has the lowest performance of any strategy we are testing.

Final Bitcoin portfolio value: $1,038.34

#2 Top 10 Index

Due to the heavy losses experienced by Bitcoin, it was expected that a portfolio based on a market-weighted index would also experience heavy losses since Bitcoin held approximately 77% of the value in the portfolio.

As the portfolio continues to rebalance, we will be able to better understand how the portfolio will deviate from the simple Bitcoin HODL portfolio.

Final Top 10 Index portfolio value: $1,041.93

#3 Coin Gecko

The Coin Gecko portfolio saw a steady loss in value over the course of this second week. Fortunately, due to the diversity of assets, the strategy dampened the losses that were experienced by the more Bitcoin-heavy portfolios.

Interestingly, every asset in the Coin Gecko portfolio had a negative return over the last 7 days.

Final Coin Gecko portfolio value: $1,040.87

#4 Nomics ML

The Nomics Machine Learning strategy blew the competition out of the water. The projected profit from last week was +21.19% across all of the selected assets. With a final portfolio performance of +26.08%, the portfolio crushed the projections.

The biggest winners selected by the Nomics ML strategy include:

  • Theta Token (THETA): +83.18% Last 7 days

  • OmiseGo (OMG): +75.42% Last 7 days

Simply put, this was an outstanding week for the Nomics ML selection of assets.

Final Nomics ML portfolio value: $1,254.98

Conclusions

This last week, the Nomics ML portfolio was able to outperform even their own estimates with a few clutch predictions. It was exciting to see the turn-around from the previous week which was largely dependent on the performance of Bitcoin.

Note: The purpose of this study is to evaluate each of these strategies over the long-term. We cannot yet draw any conclusions for the long-term potential of these strategies after only two weeks. As a result, we should take these results with a grain of salt. Non-the-less, it was an interesting first few weeks!

Week 3 Strategy Changes

Now that we have covered the results from the last week, it’s time to break down how we will change each of these portfolios for the coming week.

Nomics ML Strategy

The Nomics ML Strategy leverages the 7-day price predictions generated by the Nomics ML engine. These price predictions are then used to determine which assets should be placed into our portfolio for this week. Additional information regarding the methodology can be found in our previous article.

Portfolio Allocations

The following assets were allocated exactly 10% of the portfolio value for the second week of this study.

1. Theta Token (THETA)

  • Projected 7-day profit: +95.09%

2. OmiseGo (OMG)

  • Projected 7-day profit: +72.85%

3. HyperCash (HC)

  • Projected 7-day profit: +38.98%

4. Nano (NANO)

  • Projected 7-day profit: +36.24%

5. Ren (REN)

  • Projected 7-day profit: +24.77%

6. VeChain (VET)

  • Projected 7-day profit: +21.61%

7. ICON (ICX)

  • Projected 7-day profit: +21.52%

8. Verge (XVG)

  • Projected 7-day profit: +21.22%

9. Golem (GNT)

  • Projected 7-day profit: +21.12%

10. IOST (IOST)

  • Projected 7-day profit: +19.35%

Reminder: We are only including the assets that are available on Binance in this portfolio.

The average performance estimate is 37.28% for the next 7 days for this portfolio.

Coin Gecko Score Strategy

The Coin Gecko Score Strategy uses the “Gecko” score that is calculated by the popular data site “CoinGecko”. These asset scores are used to determine the most promising long-term assets that should be included in a portfolio. Additional information regarding the methodology can be found in our previous article.

Portfolio Allocations

The following assets were allocated exactly 10% of the portfolio value for the first week of this study.

1. Bitcoin (BTC) - Score: 88%

2. Ethereum (ETH) - Score: 79%

3. XRP (XRP) - Score: 71%

4. Bitcoin Cash (BCH) - Score: 70%

5. TRON (TRX) - Score: 69%

6. Stellar (XLM) - Score: 68%

7. Litecoin (LTC) - Score: 68%

8. NEO (NEO) - Score: 67%

9. Monero (XMR) - Score: 67%

10. EOS (EOS) - Score: 67%

Note: There were no changes to the portfolio from last week, even though the Gecko Scores did change from the previous week. That means we will leave the allocations at 10% for each of the above assets and simply rebalance the portfolio one time.

Coin Market Cap Index Strategy

The Coin Market Cap Index Strategy uses the asset market caps that are calculated by “CoinMarketCap” to determine which assets should be included in the portfolio. Additional information regarding the methodology can be found in our previous article.

Portfolio Allocations

The allocations for the Top 10 Index portfolio strategy will be the following in the second week.

1. Bitcoin (BTC): 76.86% Allocation

2. Ethereum (ETH): 10.73% Allocation

3. XRP (XRP): 4.58% Allocation

4. Bitcoin Cash (BCH): 1.99% Allocation

5. Litecoin (LTC): 1.31% Allocation

6. Binance Coin (BNB): 1.20% Allocation

7. EOS (EOS): 1.11% Allocation

8. Tezos (XTZ): 0.92% Allocation

9. Cardano (ADA): 0.66% Allocation

10. Chainlink (LINK): 0.64% Allocation (*New in Index)

Note: Chainlink was the only asset that was added to the index this week. Stellar (XML) was bumped out of the top ten and replaced by Chainlink. We will also adjust the allocations to match the new percentages and execute a single rebalance operation.

Bitcoin Hold Strategy

The most simple of the strategies we will be exploring is a simple Bitcoin HODL. The Bitcoin HODL strategy will allow us to benchmark these other strategies against the price performance of Bitcoin. Additional information regarding the methodology can be found in our previous article.

Portfolio Allocations

100% Bitcoin

Note: There will be no changes or rebalances for the Bitcoin HODL portfolio.

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InvestorMichael McCartydataComment