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    Sunday, December 3, 2017

    Crypto Currency Markets Top 12 Cryptocurrencies Ranked by Risk-Adjusted Return

    Crypto Currency Markets Top 12 Cryptocurrencies Ranked by Risk-Adjusted Return


    Top 12 Cryptocurrencies Ranked by Risk-Adjusted Return

    Posted: 03 Dec 2017 09:32 AM PST

    TL;DR: The Sharpe Ratio is an excellent tool to assess risk-adjusted return on an investment. 4 cryptocurrencies (Bitcoin, Dash, Monero, and Bitcoin Cash) all have Sharpe Ratio's over 2, which signals a good investment per risk involved.

    The Long Version

    How many people have told you that cryptocurrencies are too risky? A fraud? A Ponzi Scheme?

    Bitcoin has increased over 1,500% over the last year, but none of this is new. Cryptocurrencies have been on a tear unlike anything we have ever seen…just look at how it compares to the various bubbles of the past:

    Full Disclosure: not calling it a bubble…just providing context!

    Comparison of Bitcoin to Past Bubbles

    But you…you are a savvy investor.

    Outsized gains tell us nothing except something increased from a little to alot.

    Total Returns are not adjusted for risk

    Let's take the following quiz…one is the right answer, but you won't be graded for it.

    Which of the following investments would you rather be in?

    1. Crypto A started at $1, went to $500, back down to $1, back up to $600
    2. Crypto B started at $1, went to $100, to $300, to $600

    Both investments have the same return, but which would you choose?

    I'll give you some ti…oh you already have an answer? You choose #2?

    Exactly.

    Most investors look at total returns over various timeframes — one-day, one-month, one-year— when evaluating an investment. These returns are misleading since they aren't adjusted for risk.

    Just look at the example above —Crypto A made a massive return on the initial investment, but that does not mean it was a compelling investment opportunity.

    "Using volatility as a measure of risk is nuts. Risk to us is 1) the risk of permanent loss of capital, or 2) the risk of inadequate return." — Charlie Munger

    If only there was a better way…

    What is the Sharpe Ratio?

    The ELI5 Version of the Sharpe Ratio

    The Sharpe ratio is a measure used heavily in the finance world for calculating risk-adjusted returns.

    The calculation solves the issue of misleading total returns by taking the average return earned above the risk-free rate per unit of volatility or total risk — an absolute measure of risk.

    Investors can directly compare multiple investments and evaluate the amount of risk taken on to generate the same percentage points of return, which makes for a much fairer comparison.

    While this does make for a much better comparison, you are smart and know that even though something may have a higher Sharpe Ratio, that does not indicate it is less volatile…the higher ratio actually indicated that the investment risk-to-reward profile is much better or proportional vs. another.

    So for this article, I will show you how to implement the Sharpe Ratio in the wonderful world of cryptocurrencies.

    Top Cryptocurrencies by Sharpe Ratio

    With your new, sweet investment tool, you can calculate the Sharpe Ratios of top cryptocurrencies.

    But because I love you (and to save time), I went ahead and did it for you:

    Top 12 Cryptocurrencies by Sharpe Ratio

    Not surprisingly, Bitcoin ranks as the top risk-adjusted earning cryptocurrency from the top 12. Even though Bitcoin is very volatile, the returns have matched the craziness.

    What is interesting to me, is all the way at the bottom — our dear friend NEO, aka the "Chinese Ethereum". A Sharpe Ratio of 0.03 in an industry of 1s, 2s, 3s, and a 4 is honestly…terrible. But a large portion of this is due to NEO stumbling out of the gate after getting listed on Bitfinex, with returns of -18%, -13%, and -24% in the first 10 days of trading.

    My Gift to you — a tool to automatically calculate Sharpe Ratio

    A post from me would not be complete without a tool for you to utilize what we just talked about.

    The spreadsheet pulls in the top 12 cryptocurrencies from the Bitfinex exchange, and calculates the Sharpe Ratio for each.

    The user can modify the risk free rate, calculations, and any of the currencies currently being pulled.

    First time install

    The tool is nice and simple to use. It requires about 2 minutes to setup, then after that you are good to go.

    1. Make of copy of the worksheet: Click Here
    2. Install the Spreadstreet Google Sheets Add-in
    3. Follow the instructions and log-in to the add-in
    4. Formulas in the sheet should update

    RESOURCES

    Download the add-in: https://spreadstreet.io/tools/google-sheets-add-in

    Help: https://spreadstreet.io/docs

    First time install and login:

    https://www.youtube.com/watch?v=aLjtPR4T2bg

    Bitfinex Candles endpoint help: https://spreadstreet.io/knowledge-base/bitfinex-api-candles-endpoint/

    RELATED POSTS

    A Super Simple Cryptocurrency Arbitrage Spreadsheet for Finding Mismatched Prices

    10 Statistical Price Predictions for 10 Cryptocurrencies

    High-Flyers and Shitcoins: What I Learned from Analyzing CoinMarketCap Data in Google Sheets

    7 Smart Ethereum Price Prediction Methods for HODL'ers

    ABOUT THE AUTHOR

    John Young is the founder of Spreadstreet.io, former Financial Analyst for a big-ass company, and runner-up in the 6th grade spelling bee. He would have invested in Google if he knew about it...and had any money.

    He is the author of the Spreadstreet blog, which has over 3 readers (not a typo). He hopes to hit 10, but honestly writing is a lot of work.

    submitted by /u/1kexperimentdotcom
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    Horizon State officially announces partnership with United Nations

    Posted: 03 Dec 2017 03:17 PM PST

    https://medium.com/horizonstate/united-nations-igo-joins-forces-with-horizon-state-to-accelerate-sdg-innovation-38bd9f8f54d0

    The interview a few days ago confirmed that this partnership was a paid deal.

    HST can be found on kucoin, cryptopia and etherdelta.

    submitted by /u/Karmaologist
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    What You Need to Know About the Future of Bitcoin Technology - How Bitcoin is expected to scale with SegWit, Lightning Network, MimbleWimble, Rootstock, and More

    Posted: 03 Dec 2017 09:10 AM PST

    Horizon State (HST) just announced a partnership with the UN.

    Posted: 03 Dec 2017 03:50 PM PST

    "This collaboration creates one of the first UN IGO and blockchain partnerships, and aims to accelerate change and innovate with purpose in order to address the UN Sustainable Development Goals (SDGs), founded on the importance of enhancing global standards for justice and strong institutions with disruptive technology."

    Bringing distributed ledger to any voting process seems like a solid application. What are your thoughts on this?

    Sources: https://medium.com/horizonstate/united-nations-igo-joins-forces-with-horizon-state-to-accelerate-sdg-innovation-38bd9f8f54d0

    https://medium.com/horizonstate/horizon-state-token-mechanics-104af1dd26bd

    https://twitter.com/HorizonState/status/937450321365913600

    submitted by /u/totalfascinati0n
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    REMME’s 2018 Pilot Program is Ready to Launch

    Posted: 03 Dec 2017 05:24 AM PST

    Elixir Development Update Coming Soon! Price up 60%!

    Posted: 03 Dec 2017 07:49 AM PST

    Has any Alts done better against BTC in 2017

    Posted: 03 Dec 2017 10:06 AM PST

    Not looking at the USD charts but the BTC charts has any ALT brought in better returns in satoshi ? I was looking at my portfolio and yes I've made great returns in USD but when switching over to the alt charts I could have done better leaving it in bitcoin

    submitted by /u/riceandcabbage
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    This is one bullish market!!

    Posted: 03 Dec 2017 07:34 AM PST

    I feel happy and disgruntled at the same time- on one hand I'm pumped by the growth everywhere- but I would like to buy in more on an eventual dip...who feels the same?? Would like to get iota/more xmr/btc/dash on the dip...what are you guys holding out for??

    submitted by /u/IgotthatNEO
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    This Week In Crypto

    Posted: 03 Dec 2017 06:21 PM PST

    Hey everyone each week I do a video on the top crypto stories of the week and give away free bitcoin. This week we talk about new U.S. regulations being made on crypto and the latest crypto game CryptoKitties! Take a peak: https://www.youtube.com/watch?v=NpScYcadD18

    submitted by /u/businessJedi
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    I've heard that the biggest criticism of Bitcoin is how energy intensive the mining is. Do any coins address this?

    Posted: 03 Dec 2017 12:04 PM PST

    I'm a total noob to all this, but I'm feeling the need to get in on the frenzy. Still, the concerns about bitcoin's energy usage seem legitimate, and could inhibit its long term growth.

    Are there "green" coins? If so, which are most promising?

    Thanks

    submitted by /u/maahhkus
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    Transfer from Coinbase to Binance

    Posted: 03 Dec 2017 09:00 PM PST

    Just transferred roughly 1 bitcoin from coinbase to binance. Its already been 20 minutes. Anybody with experience can tell me how long should it take?

    submitted by /u/bigmike572
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    I just discovered Crypto currency. I have lots of noob questions listed below.

    Posted: 03 Dec 2017 08:36 PM PST

    (1) How does crypto currency get its value? How does it hold its value?

    (2) Is this basically the stock market?

    (3) Why are there so many different crypto currencies? What's the difference?

    (4) How are coins created?

    (5) Can anybody produce a coin?

    (6) Are there common scams/schemes to watch out for? If so, what are they?

    (7) How does a person mine? Can they mine any coin or just Bitcoin?

    (8) Opinions on GTCOIN? Here's a link to the website.

    (9) How do you begin trading?

    submitted by /u/PossiblyACrocodile
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    ABSOLUTE BEGINNER'S GUIDE TO TECHNICAL ANALYSIS FOR TRADING CRYPTOCURRENCIES

    Posted: 03 Dec 2017 03:55 PM PST

    Our GAINS in US dollar don’t mean a thing?

    Posted: 03 Dec 2017 07:37 PM PST

    Made this thread a few hours ago to get a better understanding of my portfolio https://www.reddit.com/r/CryptoMarkets/comments/7hb64z/has_any_alts_done_better_against_btc_in_2017/ after a few talks I've come to the conclusion that the gains in my portfolio in US dollar my local currency don't mean a thing unless I sell my coin/token for US dollar. Now the problem with that is on trading platforms there with the exception of a few like IOTA there isn't many. insert coin here/USD markets. So you will likely be trading your x1000 coin for bitcoin which you may have only did x60 in gains. Which could of did x100 if you had just left it in bitcoin. Now when you sell that alt you are at a lost unless you sell that alt to someone for USD.

    Do the math yourself add up your net cost value for a coin you bought plus the BTC gains. Now add up that same coin net value cost plus the BTC gains from when you sold your BTC for that alt

    My conclusion is I'm finding Alts that are pennies I believe in to go all in on for x100 x1000 returns for 2018 because I don't think bitcoin will bring me more than x2 x5 returns I will then buy back into bitcoin with my btc gains

    submitted by /u/riceandcabbage
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    [For Fun] You are given $ to build a portfolio of 5 coins. What coins are you including?

    Posted: 03 Dec 2017 11:16 AM PST

    Since it's a slow Sunday (other than in the market), I figured why not see what people think about their top 5 coins they believe in. I am not asking what you currently own, but rather if you were to start today, being given money to build a porfolio (like a fund manager), what would you go with? I think I would build mine around: BTC, ETH, VTC, ADA, XMR. "What's in your wallet?" - SLJ

    submitted by /u/stevcola1
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    Bitcoin Momentum Equilibrium – Considering Time Horizons as Opposed to Price Levels

    Posted: 03 Dec 2017 06:12 PM PST

    Cardano or Vertcoin?

    Posted: 03 Dec 2017 02:04 PM PST

    Hi, I'm thinking about investing in Cardano or Vertcoin, but can only afford one of them at the moment? I have done research, but have a hard time deciding between them.

    What do guys think? Any pros or cons about them?

    submitted by /u/Mikeey89
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    Payfair, making decentralized escrow on the Ethereum blockchain reality.

    Posted: 03 Dec 2017 11:42 AM PST

    Japan now has 5 FSA-Approved Cryptocurrency Exchanges

    Posted: 03 Dec 2017 05:33 PM PST

    Daily Crypto Update (12/3/17) + Technical Analysis:

    Posted: 03 Dec 2017 05:21 PM PST

    ALTS are going Supernova or am I tripping ?

    Posted: 03 Dec 2017 05:17 PM PST

    I'm not to great and reading charts I currently have close to 100 in my watch list and maybe 50% of them look like they are gearing up to go moon in first quarter of 2018 for example Lunyr (LUN) looking at the one year chart most of these Alts look similar or do I have more learning to do ?

    submitted by /u/riceandcabbage
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    anyone tried trading based on announcements coming up?

    Posted: 03 Dec 2017 12:37 PM PST

    So recently I have been noticing that a lot of crypto currencies go up either the day before or the following days after a big announcement. I was able to ride the ripple wave which occurred with their conference the other month. And I was wondering has anyone else tried this as a trading strategy, ie buy coins which are just about to have a large announcement in the expectation they will go up and sell a few days later regardless.

    So I was looking at this site specifically http://coinmarketcal.com/?page=1 and two good examples there would be lomocoin and Stratis, as they have had some large releases over the weekend, (I have noticed Lomocoin has already started trending up but Stratis seems fairly stable).

    Now I understand that generally the announcement is meant to be priced into the stock, but with the lack of institutional investors in a lot of these altcoins and poor communication lines, I wonder in many cases if users just aren't aware until after the announcement is posted on the bigger reddit pages.

    Has anyone used this method to trade profitably?

    submitted by /u/freddiegrover
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    What do you guys think about QASH?

    Posted: 03 Dec 2017 03:31 AM PST

    Aims to create a universal liquidity pool for crypto exchanges, giant success in ICO, Japan's largest bank support, and government fundings.

    submitted by /u/kke2724
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    Future of Humanity, in partnership with United Nations Intergovernmental Organisation Be Earth Foundation, announces partnership with two blockchain Australian startups, non-for-profit democratic platform MiVote and tech company, Horizon State.

    Posted: 03 Dec 2017 03:02 PM PST

    1 comment:

    1. CoinDesk
      This is one of the top new sources for bitcoin enthusiasts. In fact, it is the largest bitcoin news media platform in the world. The site is packed with reports and tools that break down the trends and patterns in cryptocurrency. I recommend checking out the reports on the research page.

      ReplyDelete