Another Crypto Strategy going public. This time by a team of investors, traders, and quantitative researchers. We have prepared a set of challenging questions so you can learn more about the team and their vision.
Peter Herrmann, one of the Experts behind the Alpha Group Crypto Strategy
Peter Herrmann, former Goldman Sachs financial analyst, leads the Alpha Group’s investment committee with over 19 years of experience in the financial industry. Crypto-enthusiast and one who is passionate about mathematics and quantitative finance.
What trends in crypto do you see? What is changing and even more what is different if you compare previous years and 2020? (development/adoption)
Cryptocurrencies are proliferating. A decade on since their dawn with the invention of Bitcoin, the value of all cryptocurrencies reached $0.25 trillion. To put that in perspective, there is $1.7 trillion USD and $1.4 trillion Euros in circulation today (European Central Bank 2019; U.S. Federal Reserve Board 2019). As of November 2019, bitcoin is the world’s sixth largest currency in circulation. The average daily trading of cryptocurrencies has surpassed 1% of trading in foreign exchange markets, the world’s largest market by trading volume. Bitcoin transactions and unique accounts alone have grown at nearly 60% per annum over the past five years. In short, cryptocurrencies are being adopted rapidly and broadly.
Where is your current focus? Bitcoin/Ether? (why)
When governments increase the quantity of paper money, it takes more pieces of paper money to buy things that have fixed quantities, like stocks and real estate. They settle above where they would absent an increase in the amount of money.
The policy is already achieving its goal: the S&P 500 is actually above its May 31, 2019 level. There is no chance that would be true without trillions of new dollars. Like hydrostatic pressure, that flood of new money will float all boats – inflating the price of other fixed-quantity assets like gold, bitcoin, and other cryptocurrencies.
One of our principal arguments for bitcoin (crypto) in an investor’s portfolio is that it has had a 209% 9-year compound annual growth rate with essentially zero long-term correlation to stocks, bonds, oil, and other asset classes. From a Portfolio Theory perspective: If you can find something that goes up in the biggest crisis in a century, you should have some of that in your portfolio.
So, we believe that this is only the beginning of a major favourable moment for the crypto asset class in the near term.
Are there also non-technical indicators that you are closely looking at? Tell us a bit about your strategy and algorithms.
Almost every trader, at some point, applied some heuristics or simple models on top of technical indicators to try to find a winning trading strategy. Some failed, some succeeded, but even those who managed to find a winning strategy saw it eventually stop achieving success.
Why? With time, markets become increasingly more automated and efficient reducing the influence on momentum. Does this mean that there is no point in trading? Not at all. There will be always patterns in the market to learn that will allow great returns to be obtained.
The key factor here is to leverage the power of advanced modelling, machine learning, and mathematics with the expertise of experienced traders. If your models are overtime considered to be state-of-art (evolving from ad hoc technical analysis to simple linear models, to logistic models, to enhanced normalization/feature engineering, to non-linear models, to even more complex non-linear models, to neural networks, to whatever the scientific community discovers next) then you will be in the vanguard of finding patterns that almost no one else is using just yet. Add on top of this the expertise of experienced traders, and you will have built yourself a very strong trading machine.
This where our strength is: Constant investigation of state-of-the-art modelling + experienced trading.
Do Crypto News affect the way you trade, or are you focusing more on daily charts and analysis?
In the world of trading, there are two different methods for speculating across all asset classes. Traders are divided into one of the following categories: fundamental analysis and/or technical analysis.
Traders use fundamental analysis with other asset classes such as bonds, commodities, and alternative investments like crypto. Regardless of the asset class, the objective is always the same — to determine the intrinsic value of the underlying asset and of course some major news events may drive the price on a specific asset or class. From a macro perspective (medium to long term), fundamental analysis is used most of the time to decide about the assets on a specific strategy.
Technical analysis uses a completely different method. It’s a trading approach designed to evaluate investment flows and trading opportunities by analyzing statistical trends. These statistical trends are gathered from various trading indicators, most notably price movement, volume, or oscillators, to name a few. These signals are used by our algos to appraise the strength or weakness of the underlying asset and determine the trading strategies in the short term.
To see the strategy on ICONOMI click here: https://my.iconomi.com/asset/DISRUPTALPHAEDGE