In comparison, the volatility of gold averages around 1.2%, while other major currencies average between 0.5% and 1.0%.
So how can this volatility be profitable? By using mean-reversion strategies to capitalize on the spread between buy and sell prices that are very profitable in high volatility markets. Such strategy applied to Bitcoin trading can improve the performance of a buy-and-hold strategy. Since a mean-reversion strategy is independent of the market level, it can add an independent performance to a buy-and-hold strategy. As an example, the strategy could use 1% of the portfolio assets and then aim to earn an additional 1% per day on this part of the portfolio. Historically, this strategy would have added 24% per year to the portfolio performance.
Of course, Bitcoin returns do not follow a normal distribution. So what is the likelihood that a trader could both buy and sell Bitcoin over the course of 10 days and earn 1% each day? Based on statistical data, this strategy would have been successful in 2297 out of 2615 days, or 87.84% of the time. (Read the full article.)
My Bitcoin Hodler Strategy
The strategy of this Bitcoin hodler is simple – let expert traders do the work so I can acquire more cryptocurrency, and occasionally trade on my own. Trading takes a tremendous amount of time, effort and research – and it is stressful when making a decision to sell. Following Tone Vays for over four years has contributed greatly to my education, but there are several other traders I have come to respect. Tone tells it like it is vs. what you’d like to hear, and watching his daily briefing has helped me learn technical analysis.
I am content to keep earning and stacking Bitcoin because I believe it will pay off in the future.