In these volatile, but markedly bullish markets, it’s easy to think that you are a trading genius as you collect profits. However, are you actually outperforming the market?
Cryptocurrency is having a phenomenal year. In the past few months, Bitcoin price has climbed from the low $700s to $1,184.97 (CoinMarketCap.com), correct briefly at the beginning of the New Year and now seemingly continue its march upward.
Altcoin gains are not to be ignored either, with some prominent altcoins nearly doubling or more in value (i.e. Monero, Dash and MaidSafeCoin). The less well-known altcoins are also seeing renewed interest, which has been accompanied by trading volatility largely absent in the prior months.
Most notably, last week Pascal Coin rose from obscurity at a price of $0.015 to a peak value of $1.53, with a trough-to-peak growth over 10,000 percent. Furthermore, Pascal Coin daily trade volumes during this time ranged between $5 mln and $30 mln on Poloniex.com, liquid enough for traders to exit the market with enormous profits.
Cointelegraph discusses publicly available metrics for comparison. Match up your portfolio performance to see how you compare over the past three months, from Nov. 1, 2016, to the present day.
Bitcoin: 35.3 percent gain
Bitcoin is the gold standard of cryptocurrency. With liquid markets and easy fiat-to-Bitcoin trading through reputable exchanges, perhaps nothing in the world of cryptocurrency is easier than a buy-and-hold Bitcoin strategy.
So first and foremost, how does your portfolio growth compare to Bitcoin’s? Over the past three months, Bitcoin price has risen from $706.53 to its current price, with an increase of 35.3 percent.
If you have been trading altcoins or day trading Bitcoin with profits less than this, you may want to reconsider your strategy.
- Image courtesy of CoinMarketCap
ICONOMI Index: 19.6 percent gain
The ICONOMI.index was created back in July 2016, “to reflect the development of a credible cryptocurrency market,” according to its CEO Tim Zagar. Its composition includes weighted percentages of Bitcoin, Ethereum, Monero and several other altcoins, which are rebalanced monthly.
The index composition is subject to its caretakers who select altcoins on a monthly basis, thus dampening its usefulness as a track of value.
- Image courtesy of ICONOMI
Nevertheless, if you have profits less than 19.6 percent, you may want to consider buying their index token (ICNX) when it goes live next month.
T&C 20 Index: 65.1 percent gain
The T&C 20 Index is positioning itself as the “S&P 500 Index of the altcoin market,” according to its managers. The index was created in April 2016 and includes approximately twenty altcoins weighted by market capitalization.
Aiming to be a long-term standard for tracking value in the altcoin market, the T&C 20 Index only occasionally alters its composition. While the altcoin market appears relatively stagnant in November, it now appears to be in the middle of a bull market, as the T&C 20 Index is up 65.1 percent.
Although there is no publicly traded token that tracks the T&C 20 Index at this time, the composition of the T&C 20 Index is publicly available.
- Image courtesy of T&C 20
If you are attracted to the altcoin market, you may want to consider matching the T&C 20 Index composition found on their website.
Smith + Crown Index: 5.53 percent loss (one month period)
This market-cap based index includes 11 of the largest cryptocurrencies by market capitalization, such as Bitcoin, Ethereum and Litecoin.
As the index has a Bitcoin dominance over 90 percent, it trends pretty closely to the performance of Bitcoin. Of note, the historical chart above only dates back one month, as this was the longest period they had publicly available.
- Image courtesy of Smith + Crown
In summary, although the digital currency sector is still in its infancy, a few valuable financial metrics for evaluating market performance do exist. Not only are these indexes and metrics helpful in assessing your own performance, but they can also be useful in tracking value in the various cryptocurrency markets.