Welcome, to the August edition of the One Button Capital monthly report. This time the markets were not so gracious and got us straight back to June’s price levels. To top it off, the whole macroeconomic picture does not look extremely promising with China’s economy collapsing, and US inflation hitting 40-years highs.
The hope for the decentralized world lies within the upcoming Ethereum Merge in mid-September. Ether’s founder Vitalik Buterin promised a “Surge, Verge, Purge, and Splurge” after the technological update, and the whole community is waiting for brighter days in the upcoming Q4 portion of the year.
In this report, you will find a complete market summary of August 2022, the insights from our research team, as well as the performance summary of One Button Capital this month.
August was a rollercoaster for cryptocurrencies. We saw Bitcoin (BTC) jump to $25k and Ethereum (ETH) to $2k before they crashed back down. The positive news for the market as a whole is that BTC closed above $20k, despite opening the last day of the month below the psychological level.
Of the top ten crypto assets, Solana (SOL) took the largest hit in August, by losing -22.16% of its price. Tether (USDT) remained the top stablecoin with a market cap of $65.86B, followed by USDC at $52.38B.
Global cryptocurrency market capitalization:
In a similar situation is the total global cryptocurrency market capitalization. Despite being valued below the symbolic $1T on several occasions, it still managed to end the month above the benchmark. Fighting for these small wins is very crucial for preventing an even bigger sell-off.
Bitcoin’s price action
Bitcoin (BTC) has sealed its worst August performance since 2015 after the monthly candle closed down by -12.12%. Though less volatile than many months, August still saw some big price swings, with Bitcoin trading as high as $25,135 and as low as $19,600, according to data from CoinMarketCap.
The biggest headwind facing the token was increased hawkishness from the US Federal Reserve and other leading global central banks. With inflation in most developed nations running at multi-decade highs and not looking to fall back within guideline ranges soon, investors sold off most risk assets in August as they braced for further interest rate hikes.
Stocks fell for a fourth straight day on Wednesday, the last day of August, putting the summer market comeback in doubt as investors weighed the Federal Reserve’s inflation-fighting efforts. The S&P 500 lost roughly 0.8% to end the day at 3,955.00. The major averages were higher earlier in the day.
Investors had been debating for weeks whether the economy is in a recession or heading toward one, and many thought an economic downturn would give the Fed reason to ease up on its rate hiking plan. Fed Chair Jerome Powell reiterated in his Jackson Hole speech Friday, however, that the central bank is committed to curbing inflation and will continue to raise rates even in a recessionary environment.
Energy prices gained +1.3% in August, led by coal (+14.1%) and natural gas Europe (+36.5%). Non-energy prices changed little, as a group. Agricultural prices eased -by 1%. Food prices declined by -1.6%, led by grains (-4.5%). Beverages gained +4.4% while raw materials dropped -2.2%. Fertilizers eased -1.5%. Metals gained +3.7%, led by zinc (+15.5%), copper (+5.8%), and lead (+4.4%). Precious metals gained +2.1%.
Source: WorldBank.org
As growth in major global economies slows as a result of high inflation, exacerbated by the Ukraine war, many economists are hoping that China will again come to the world's rescue.
But this is not 2008, when China's then rapidly expanding economy and a huge stimulus unleashed by the Beijing government, helped Western countries to recover much faster from the financial crisis. This time, China's economic woes run deep. The government has all but given up on this year's target of 5.5% GDP growth and Premier Li Keqiang warned last month there was little appetite right now for more expansionary policymaking.
Business and consumer activity in the world's second-largest economy has been stymied by Beijing's zero-COVID policy that sparked monthslong lockdowns on workers in dozens of cities, forcing many businesses to shut. Chinese leaders loathe reversing the draconian policy now, for fear of unleashing a bigger crisis.
The Merge is the most significant upgrade in the history of Ethereum. Extensive testing and bug bounties were undertaken to ensure a safe transition to proof-of-stake.
TL;DR
The Merge is one of the most significant and anticipated upgrades in the history of Ethereum, and although in the long-term its impact will be felt by everyone, in the near term some folks will need to take action to be fully prepared.
Users and holders
You do not need to do anything to protect your funds entering The Merge.
This bears repeating: As a user or holder of ETH or any other digital asset on Ethereum, as well as non-node-operating stakers, you do not need to do anything with your funds or wallet before The Merge.
Despite swapping out proof-of-work, the entire history of Ethereum since genesis remains intact and unaltered after the transition to proof-of-stake. Any funds held in your wallet before The Merge will still be accessible after The Merge. No action is required to upgrade on your part.
As we approach The Merge of Ethereum Mainnet, you should be on high alert for scams trying to take advantage of users during this transition. Do not send your ETH anywhere in an attempt to "upgrade to ETH2." There is no "ETH2" token, and there is nothing more you need to do for your funds to remain safe.
Source: Ethereum.org
This month our research is focused on the wealth management part of cryptocurrencies. As this is the field in which One Button Capital is operating, it is of utmost importance for us to always stay one step ahead in every detail surrounding the financial world.
Below are three articles that tackle the crypto trading topic from different angles. In the first and biggest piece we will analyze the performance of 15+ crypto asset managers and compare them with OBC. After that, we will share our guide on how to better understand the trading behavior of your AI bots. Finally, we will give a short refresher on API crypto trading and its security aspect of it. Let’s start.
Crypto funds are a relatively new type of investment vehicle that arose as a result of the growing awareness and interest in cryptocurrencies. Investors who want to participate in the volatile, but often very lucrative crypto markets without the need of learning how the technology works, can participate in these funds.
The funds can consist only of cryptocurrencies or a mix of crypto and other risky assets. They can also consist of investment/trading strategies to manage those cryptocurrencies. This relatively new segment of the investment industry is expanding, with new crypto funds launched and new inflows to existing funds announced every week.
The assets under management (AUM) of crypto funds exceed $59B as of the third quarter of 2021, and it is projected to go even further in the upcoming years.
Most of the crypto funds worldwide are either venture funds or hedge funds, with a slightly higher number of venture funds than hedge funds. Except for these two, crypto funds can also be private equity or ETF, but these comprise a rather small share of the total crypto funds.
In this research, we will focus on three types of funds: crypto mutual funds, crypto index funds (ETFs), and crypto hedge funds. Each category will have several representatives with a slight difference in their investment strategy.
The strategies that each of the funds may use fall into one of the following categories:
In the following chapter, we will look into fifteen different crypto funds. We will look at their most recent performance and how they manage their investor’s capital (plus what they charge for it). But first, let us determine how exactly will we measure the performance of the funds.
Evaluating Performance:
To fully understand the scope of measuring crypto funds' performance we would need to introduce concepts like benchmark strategies, risk factors, series regressions, risk-adjusted performance, and much, much more. There is certainly a time and place for that, but for simplicity purposes, we will look at just the most important things:
When comparing the funds against each other we will use data from the fact sheets of the companies, and convert everything into a monthly percentage gain/loss. We will analyze the timeframe from January 2021 until the end of July 2022, as this is the most reliable period for the current market condition.
While many crypto funds recorded astonishing returns during the first golden years of Bitcoin, they did very poorly in the recent market crash. For investments from now on, it is vital to look at the most recent performance to determine what can stand the test of time.
Additional Benchmark
We will use the Eurekahedge Crypto-Currency Hedge Fund Index as an additional benchmark for comparing the following funds. The Eurekahedge is an equally weighted index of 14 constituent funds. The index is designed to provide a broad measure of the performance of underlying hedge fund managers that allocate to Bitcoin and other cryptocurrencies. The index does not contain duplicate funds and is denominated in USD.
In the last 12 months, the index lost -5.46%, with a maximum drawdown of -51.29% between April and June 2022. Considering the annualized return of +91.33% of the index since its inception in 2013, it is evident that we are in a crypto winter right now. The good news is that it is far from the 2014 and 2018 crashes (so far).
Every fund that manages to outperform Bitcoin over at least 12 months can be considered successful, and those that do better than the Eurekahedge Crypto Index can be named exceptional. Let’s see how our funds compare:
Overview of 2021 and 2022
Below are two tables for an in-depth overview. In table 1 we are going to look at the monthly returns in 2021 with an annualized and average performance included. Afterward, we will look at the performance in 2022 (from Jan 1 to July 31), again monthly, annualized, and averaged.
One Button Capital was just phenomenal in 2021, returning +200.22% over the whole year (double the average) with a max drawdown of just -18.55% during May. ICONOMI and Icoinicic Capital are the two other funds that have made better returns than the Eurekahedge Index benchmark. Some of the crypto funds were started after January 1, 2021, so the annualized data for them (*), is not complete Six of the funds failed to outperform Bitcoin.
As we can see from the table above, the economic scene changed drastically in 2022, sending most of the previously successful funds deep down into a recession. The passively managed funds dropped astronomically, following the leading crypto assets that they were pegged to. Almost all of the actively managed funds failed to adapt to the new patterns.
Those that implement AI trading or sophisticated algorithms are standing on top currently. Crypto Alpha performed decently with only a -18.95% loss, compared to Bitcoin’s -49.58% and Eurekahedge’s -38.65%. One Button Capital really shined with just a -3.71% loss, thanks to its AI technology.
Now it is time to look at the detailed breakdown of each of the funds in order to see what strategies they use, and what are the costs and requirements to join one of them.
Crypto Mutual Funds operate like traditional mutual funds. The fund represents a pool of investors’ capital that is actively managed by a fund manager who gets paid for the work with a management fee. Crypto mutual funds are publically available, highly regulated (usually), and have lower entry requirements.
Rivemont Crypto Fund
The Rivemont Crypto Fund launched on December 14th, 2017, and is aimed at qualified Canadian investors. It is currently the actively managed cryptocurrency fund with access to the most tokens in Canada. The fund uses both a technical and fundamental approach.
The fund charges a 1-2% annual management fee depending on the class, and a fixed 20% performance fee each year when certain results are reached. The minimum initial investment in the Fund is $500 for Series A Units and Series F Units. Their Series B units fall under the classification of a crypto hedge fund.
Overall the fund returned -0.2% since inception and the worst month for the fund was Jan 2018 when it netted -33.1% with fees included. In the last 12 months, between January 1, 2021, the Fund has returned -21.94% compared to Bitcoin’s -19.51% and Eurekahedge Index’s +48.64%.
Incrementum Crypto Gold Fund
The Incrementum Crypto Gold Fund invests in a balanced portfolio of gold, crypto, and silver securities. The fund is broadly positioned in precious metals and cryptocurrencies. Precious metal accounts, ETCs, gold, and silver mining stocks, and options are used to implement the allocation. The strategic asset allocation is one-third gold, one-third silver, and one-third cryptocurrencies and is actively managed within target ranges.
The crypto mutual fund utilizes an active asset allocation with daily liquidity and active portfolio management. The minimum investment for share class R and P is €1. For share class I the minimum investment is €500.000 (again this falls into the hedge fund category.) Regardless of this small detail, both the EUR I and EUR R share classes showed similar results with -14.06% being the average since the fund’s inception in March 2021.
The management fees for the fund range between 0.9% and 2%, while the performance fee is 10%. The maximum drawdown was -38.86% and the performance since January 2021 is -19.78%, which is almost 1;1 to Bitcoin’s -19.51%.
15 FiCAS Active Crypto ETP
15 FiCAS Active Crypto ETP is the world’s first actively managed Exchange Traded Product (ETP) with the top 15 cryptocurrencies as an underlying asset class. The investment style is discretionary, with no use of leverage or derivatives. It is based on a profound knowledge of cryptocurrency markets, developed over 7 years, and, more specifically, on continuous in-depth investment research, technical and fundamental analysis.
The fund has returned -8.29% since inception, with a max drawdown of -67.14%. The management fee is 2% yearly and the performance fee is 20%. In the last year, the fund lost -57.48%. The minimum investment is 100 CHF.
Crypto Alpha Strategy ETI
The Crypto Alpha Strategy ETI follows an actively managed and diversified crypto strategy. The strategy actively selects and trades liquid crypto coins, currencies, and derivatives in the crypto market based on state-of-the-art Artificial Intelligence (AI) technology with trades being executed fully automatically.
Since inception, the fund has returned +100.1% with a maximum drawdown of -29.7%. In the last year, the fund went down by -16.7%, which is a lot better than the underlying assets. The minimum investment in the fund is €1000 with a management fee of 0% and a performance fee of 20%.
Crypto Index Funds And Crypto ETFs* are the crypto variant of the traditional index funds and ETFs. Their main characteristics are a passive investment strategy that can be as simple as following the performance of the top 10 to 20 cryptocurrencies in the market.
The differences that we found in our research between traditional and crypto indices are the higher management fees and the very high allocation of capital in particular assets. While index funds usually have a very low (below 0.5%) management fee, their crypto counterparts charge the same and in some cases even more than the actively managed funds. That goes completely against the main reason why index funds were originally created in 1975 by John Bogle - diversified investment with low management cost.
Finally, index funds are usually restricted to allocating no more than 5% of their managed portfolio to a single stock, or asset but when it comes to crypto index funds we will observe that some go to as high as 30% or 50% in a single cryptocurrency.
*Due to the very small difference between index funds and ETFs (which are a form of index funds), we will analyze them under the same category as their performance is almost identical.
Bitcoin Strategy ETF
ProShares Bitcoin Strategy ETF (BITO) is the first U.S. bitcoin-linked ETF offering investors an opportunity to gain exposure to bitcoin returns in a convenient, liquid, and transparent way. The Fund seeks to provide capital appreciation primarily through managed exposure to bitcoin futures contracts.
Since its inception, the fund has dropped by -70.97% and is slightly worse than Bitcoin due to the 0.95% management fee that the Fund charges.
Grayscale® Digital Large Cap Fund
Grayscale offers a wide variety of cryptocurrency funds, with their Digital Large Cap Fund, in particular, being among the first securities solely invested in, and deriving value from, a basket of large-cap digital assets in the form of security while avoiding the challenges of buying, storing, and safekeeping those digital assets directly.
In the last year, the fund went down by -65.49%, which is kinda scary considering the 2.5% management fee for a passive investment strategy. The performance fee of the fund is 0%, and the minimum requirement is $50,000, and it is only for accredited investors. On the technical side, the Fund is registered as a mutual fund, put in terms of strategy it is closest to an index fund.
Bitwise 10 Crypto Index Fund
The Bitwise 10 Crypto Index Fund seeks to track an Index comprised of the 10 most highly valued cryptocurrencies, screened and monitored for certain risks, weighted by market capitalization, and rebalanced monthly.
The fund has returned +159.51% since its inception in November 2017 but is down by -39.08% in the last year. The management fee is 2.5% with a 0% performance fee.
ICONOMI Blockchain Index
Blockchain Index is a passively managed Crypto Strategy investing in established blockchain-based projects with active beta components. The Crypto Strategy is market-cap weighted, with fixed BTC and ETH weight. The focus of the investment selection is on nascent projects with potential strategic importance in the future distributed economy.
The fund has shown incredible results over the long run outperforming BTC by over two times. In recent times though it is doing poorly and the drawdown in the last year is -53.29%. The management fee, which goes by the name of “copy fee” in this case is 3%, with a 0% performance fee.
Crypto Hedge Funds are the most sophisticated type of crypto fund. They are characterized as private investment entities, that accept a small number of accredited investors who meet all of the fund’s requirements. Crypto hedge funds are known for using higher-risk investing strategies with the goal of achieving higher returns for their investors. Here the higher management fee is justified if the fund performs exceptionally well.
Cyber Capital Fund A
Cyber Capital Fund A exclusively invests in cryptocurrencies with a long-term perspective, based on the premise of value investing through fundamental analysis. The fund strives to select investments based on thorough due diligence, examining token valuation, technical protocol level research, on-chain data analytics, and active engagement with management and developer teams.
The fund has shown great results since inception but has been down by -64.52% since the start of 2022. The management fee is 2% and the performance fee is 20%. The minimum requirement for an accredited investor is €100,000.
Der F5 Crypto Fonds 1
The F5 Crypto Fund 1 invests diversified in a wide range of crypto assets. The investment strategy is determined by long-standing crypto experts and is based on the research of our crypto analysts. In addition to a discretionary strategy, part of the fund volume is invested passively and index-based.
The fund has a minimum investment requirement of €200.000 and a management fee of 2%. The performance fee is 20%, which is aligned with the other actively-managed funds. The maximum drawdown is -34.72%.
Pythagoras Investments Token Fund
The Pythagoras Token Fund engages long/short strategies in crypto markets. The fund uses technical analysis that is commonly practiced by CTAs in the commodity markets. The fund relies mainly on momentum trading during bull markets and shorting strategies during bear markets.
The minimum required investment for the fund is $100,000, with a management fee of 0% and the performance fee is in the form of an incentive allocation that goes from 30% up to 50% (gross). During the analyzed timeline the fund did not shine in 2021, underperforming Bitcoin by -34.07% and the Eurekahedge Index by -116.71%.
But in 2022 the tables turned, and the fund is the only one with a positive net return (thanks to its shorting strategies). Still, the Fund is up by +23.42% since the beginning of the year, and that is not enough to compensate for the missed profits during extreme uptrends.
The most significant takeaway from this is that earning profits during a market crisis is indeed possible when you have the correct shorting strategies(*). Furthermore, it helped the Pythagoras Fund minimize losses, achieving a maximum drawdown of -11.89% since Jan 2021. The best in the report.
*One Button Capital is on the verge of releasing its own AI model that is capable of shorting the markets. The strategy is in its last testing stages, and it will be the first of its kind. Shorting can be risky, especially with leverage, so we are dedicating additional time to ensure the bots get the best live training possible before we release the tool to our investors.
Icoinic Capital
The Icoinic Algorithmic fund is optimized and monitored 24/7 by our analysts and developers. Market conditions being key, it applies various strategies to yield better results from high-risk funds. This fund is suitable for participants who dare and are able to carry a high risk.
The minimum investment amount is €100.000, which a yearly management fee of 2% and a performance fee of 20%. In the analyzed period the fund has returned +113.91%, whit a maximum drawdown of -48.90%
One Button Capital
Assets in One Button Capital are fully managed by the AI trading strategies developed in-house by the One Button Capital research team. This tech-driven approach allowed One Button Capital to achieve significant investment returns both in relative and absolute terms.
The OBC Fund* has a minimum required investment of $100,000, with a yearly management fee of 1.5% and a performance fee of 15%. The Fund* performed at +189.07% since January 2021, and the max drawdown is -35.19%.
All trading and portfolio management is done purely by AI-backed models. The models are using recurrent neural networks and reinforcement learning for maximizing returns while trading cryptocurrencies. Architectures used in the models include the ones also used by major tech companies Amazon, Google, and Facebook for data processing and analytics, such as LSTM, GRU, Performer (Transformer), GMLP, Filter, and others. All the models are developed in-house by the One Button Capital research team.
* OBC Fund represents AI trading models running on a dedicated Binance account of One Button Capital since January 13, 2021 with the initial balance of less than $200,000. Registrations for the BVI-registered open-ended fund are currently open.
Below is a simplified chart of One Button Capital versus Bitcoin and the Eurekahedge Crypto Funds Index. In the last 20 months, the OBC Fund outperformed both BTC (which is at loss for the time period) and the industry’s average, provided by Eurekagedge.
After October 2021 the markets were never the same. Bitcoin went on two consecutive down cycles since then and dropped below its 2020 close. The industry average of 14 crypto funds provided by Eurekahedge also followed the leading cryptocurrency but managed to stay at least on some profit since 2020.
One Button Capital also got hit by the widespread crypto crisis, but despite relying on only price data information, the AI was quick enough to adapt and eventually gain an even larger edge over the two benchmarks.
But did it also outperform the other funds from the list? Let’s see.
Two crypto funds in particular were more profitable than One Button between Jan 2021 and Oct 2021. The ICONOMI Blockchain Index Fund and Icoinic Capital were trading above 220% ROI each, but they were not so swift in adapting to the 4th crypto winter. Around April 2022 all three funds met at about a similar ROI.
After that One Button Capital gained a full lead over the whole list, having July 2022 as its most successful month to date. All three funds stayed ahead of the industry average from Eurekahedge, while all the other funds from the list drowned alongside Bitcoin, or even deeper.
Another fund that stands out is the Pythagoras Token Fund which showed steady growth in the last 20 months, and while it underperformed the majority of crypto asset managers in 2021, it really shined in the 2022 bear market and even equalized the Eurekahedge Index at the end of our analyzed period.
Final breakdown
Below is a table of all the important stats for each of the analyzed funds/indices from our research. From the investment strategy to 2021, 2022 (until now), and 2021-Now returns on investment (ROI) and maximum drawdown (MDD).
In 2021 we had an enormous boom in crypto with almost everything going up and many new people joining the industry both as investors and developers (and other workers). Logically, every investment strategy worked great, and the funds that utilized them were very profitable. The average gain for our fund/indices for that year was +83.95%, with only two funds having negative numbers due to their late inception date that caught the start of the bear market. Bitcoin had a maximum drawdown of -40.40% and overall 13 of the funds did better in that metric.
The real test came in 2022, when crypto made a full 180 turn, sending the majority of investors and crypto funds into deep losses. Funds filed for bankruptcy and many firms started cutting out staff. In terms of performance, the asset managers we picked for the report showed mixed results. The funds that utilized passive management all underperformed Bitcoin and recorded an MDD up to -65.82%. One Button Capital was most successful in minimizing the damage without using a shorting strategy and is currently at -3.71% since the beginning of 2022.
For the whole 20 months that were analyzed only 4 funds ended the period at a profit. The funds that utilized AI technology or algorithmic active management had an edge over the market, while the one fund that shorted the market managed to even gain in the 2022 downtrend period.
The wealth management industry is growing at a rapid rate despite the poor market conditions of the last year. Many of the first crypto funds performed exceptionally well during the golden years of Bitcoin, even if they did not manage to outperform the asset itself.
Now, that the times have changed and the whole crypto market is bleeding, many of the funds that utilize passive investment strategies like crypto index funds are doing very poorly. Their high management fees compared to traditional index funds are not justified either, with many of the funds down by nearly -70% in the last year alone.
On the other side of the spectrum, there are funds that use active management. Those are the crypto mutual funds and crypto hedge funds. They rely on more sophisticated trading methods like technical and fundamental analyses, algorithmic trading, and the utilization of AI technology. The funds from this category outperformed the passive funds over the last year 100% of the time.
Probably the most emerging trend in asset management is the usage of neural network-based trading. Some funds have already successfully implemented the technology, while others are staying behind. End-to-end asset managers that provide AI trading bots to their investors are a good indicator of how the tech is performing against traditional funds.
One Button Capital ranked number one on the crypto asset managers list, as it outperformed both Bitcoin and the Eurekahedge Crypto Funds Index over the last 20 months, and it minimized the losses during the current bear market in order to return +189.07% in the analyzed 2021-2022 period.
The ICONOMI Blockchain Index Fund and the Icoinic Capital Funds also showed amazing results in this market, thanks to their active management technology. If it weren’t for the rough bear market in 2022, they could have been even ahead of OBC, taking their 2021 performance into consideration.
In our July report, we briefly introduced a completely new concept of reading performance charts. Today we will go more in-depth into the theory behind it and why it is useful when observing your AI's trading results.
The trading AI in One Button Capital relies only on pure price data analysis. All trades, decisions, and performance thereafter are dictated by nothing else but the bot’s ability to predict the next candlestick. The bots don’t have a team of economists or fundamental analyzers to help with external data and information for ongoing events.
Thus, the type of investment strategy that the OBC bots use falls under the realm of technical analysis. But there is a catch. All methods, patterns, and fancy indicators from traditional technical analysis - the AI doesn’t need them. In fact, if it used any of those, the results would probably be worse, as every single tool, created by a human is based on historical data. And history rarely repeats itself, especially in crypto.
So here is how NOT to read your AI’s trading chart the next time you open your dashboard. Forget about all patterns that you know or heard of. No head and shoulders, no double tops, nothing. Trying to reverse engineer the trading strategy of your AI won’t work as well. As nothing is set in stone when it comes to investing.
Think of your trading bot as a chess engine. It is capable of making the most unpredictable, unhuman moves possible, but it wins against even the strongest masters of the sport. Observe the performance and forget about the method. Enjoy the AI mastery.
The markets are constantly evolving, and your AI is always competing with thousands of other traders and trading robots around to world. From here onwards there is only one important metric that you as an investor using AI bots should care about - performance over the long run. If your trading robot earns money and protects during bear markets, then the technology is doing its thing, simple as that.
To completely understand the behavior of your trading AI bot we’ve introduced three innovative patterns that go by the names “sticking”, “folding” and “shadowing/mimicking”. Let us look at what each one of them means with a couple of examples.
Sticking
Sticking is the main pattern that you can observe in many of the trading AI’s of different companies and even cryptocurrency funds.
At its core, it is nothing different than a simple index-following pattern.
When you look at a graph where your investment is following at a 1:1 ratio the performance of an asset (literally sticking to it), you are observing a sticking pattern.
When it comes to One Button Capital’s trading bots you are most likely to observe this pattern in the initial days of running the strategy. Your bot may or may not buy into the market pair it is launched against, but once it does it will just follow the coin's performance to the dot.
After fully adapting to the live market the AI is ready to begin its journey in trying to beat the market. For that, he needs one key component that comes in the next pattern.
Folding
If you ever wondered how a strategy can return more money than the investment’s market performance over the same time period it is actually pretty simple. If your bot, for example, followed the asset in a “sticking” pattern like a passive index fund it would never be able to beat the performance, as at best it would return 1:1 as much as the investment. The key here is to know how and when to “fold”.
Once your AI detects a signal that the coin can go down it would immediately sell its position and convert it into fiat/stablecoins.
By doing this the bot is able to protect the gains from the uptrend, thus automatically getting a better return than the market when it goes down.
Additionally, the saved capital is ready to be used at the next favorable moment. That is the most powerful moment when a bot shines.
Shadowing/Mimicking
Now that your bot has successfully gained an edge over the market it is time to enter the endgame. The AI will get back to a pattern that looks like “sticking” but with an amplitude in the ROI. Essentially the bot will be “mimicking” the asset’s performance, leaving the coin in its shadow.
If the markets are moving in an overall uptrend the bot might choose to play it safe and ride the bull run, keeping its edge over the underlying asset. If it detects a high probability signal for a small “folding” opportunity it may take it in return for more edge over the market. If it detects that the trend would reverse in downward movement then it would definitely try and sell the positions on time.
Artificial intelligence can give an edge over other investment strategies, but understanding how it works is not that easy. While the trading strategy of OB Capital’s AI bots falls into the category of technical analysis, trying to read your bot’s behavior through traditional patterns is flawless and inaccurate.
The AI has only one goal and that is to outperform the asset that it's paired against. The trades it makes can be unpredictable and sometimes feel unhuman, but the results are what matters most. To get a bit of understanding if and how your bot is doing against the market we introduce three unique patterns: “sticking”, “folding” and “mimicking/shadowing”.
In August we shared an article on how to use API keys for crypto trading bots and the security of API asset management. Here is a small segment from it.
API (Application Programming Interface) is a set of programming instructions that allows two software programs to interact. API is like a language that lets different software apps talk to each other.
In the case of One Button Capital, it allows our software to optimize and effectively manage your crypto portfolio directly on your exchange account.
Using automated trading through API is significantly easier compared to traditional asset management. The strategy activation process is fully automatic and takes 5–10 minutes to complete. In the case of One Button Capital, all you have to do is to sign up for an OBC account, connect your cryptocurrency exchange with an API key, and choose the allocation size in USDT or USDC. That’s it, the rest will be taken care of by the software. You can view the product demo here.
The API trading process involves a series of steps to ensure a) the safety of the connection and user’s assets, b) the accuracy of data, and c) the consistency of service.
To ensure the safety of your assets, don’t enable withdrawal/deposit access when linking your API key to an external platform. The bots need trade-only API access to function sufficiently. API keys are stored encrypted in the One Button Capital database. In case anyone ever gets access to the database, all they would see is a random string of characters without any meaning.
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Can AI Outperform The Bear Market?
August was a colorful month in crypto. We saw Ethereum soar by another 20% in just a few days. The whole market looked like it is finally escaping from the Crypto Domino Effect. Assets like BNB and Polkadot jumped by +14.69% and +12.38% respectively on some weeks, and our AI was there to catch the uptrend.
And then the worst happened. Two consecutive bad events sent the whole market back to its June levels, erasing almost all of July’s profits in a blink. Despite washing out billions of market capitalization from stock and crypto markets, August was a relatively bright month for the assets under management at One Button Capital.
Overall OB returned -7.40%, while ETH went down by -7.71% BTC crashed by -14.14%.
This month the leading AI bots are pretty interesting. Horizon which is a sideways machine returned +0.16%, making him one of the few investment tools on the green side in the whole industry during August. Closed second, Clipper - the uptrend maestro managed to finish the month at -0.79%. Finally, the newest and most universal AI, Explorer finished the month at -2.14%.
Net Return Of The Other Strategies During Their August 2022 Trading
August might have been a red month overall, but the AI managed to squeeze profits on several market pairs, including ETH: USDT: +13.68% (Clipper), CAKE:EUR: +11.19% (Performer v2) and DOGE:USDT: +8.76% (Performer v2).
Outperforming the top two cryptocurrencies over the long run
The graph focuses on the overall average performance of all BTC trading strategies on One Button Capital. The AI-boosted BTC outshines the number one crypto by over +80%
One Button Capital’s long-term results against Bitcoin.
OBC: +45.40%
BTC: -44.14%
One Button Capital’s long-term results against Ethereum.
OBC: +285.90%
ETH: +36.74%
No, there is no spelling mistake in the above results. The AI-Boosted Ethereum strategy outperformed ETH by more than +300% over the course of 18+ months. In absolute terms, this is almost 7x times more ROI in less than two years when compared to a buy-and-hold strategy for the same investment period.
Protecting against the most devastating crypto meltdowns:
AI models that were trading on LUNA: BUSD and LUNA: USDT market pairs in May 2022 managed to exit the positions during the downward spiral movement at an average of $62.61 per LUNA, saving the investors from what could have been a -99.99999% loss.
It is worth noting that the AI models only use price and volume data for decision-making, demonstrating its ability to identify anomalies and react to black swan events.
Read the full LUNA case study.
In this update, we’ll review the trade history and performance of AI trading models on the major cryptocurrency markets.
The trades of Performer v2 AI on BTC: USDT during August were spot on, where it successfully predicted the Aug 19–20 pullback and exited the position right before it happened.
The only thing the AI wasn’t prepared for was Powell’s speech and the market panic sale before that. According to the Performer v2 analysis, on August 26, almost everything signaled the upside movement. The market even started moving in that direction but had crashed quickly by roughly -10% after the Chair’s address.
This repeats an important lesson in investing: despite how strong the technical markers are, a sudden external event can completely reverse the market sentiment in at least the short term.
Since the existing One Button Capital AI models operate by analyzing purely technical data, technically, they cannot react to external events like the one from last week. And this brings our team closer to implementing an AI model to analyze the media/market sentiment/sudden volatility and react quickly to similar cases.
Despite the last week’s pullback, the AI performance during August was still solid. The Performer’s v2 ROI trading on BTC for the previous 30 days is -3.6% against -12.3% of BTC.
A similar situation can be observed in the trade history of AI on Ethereum.
The only difference is that Ethereum rallied more significantly than Bitcoin in August and the AI managed to capture the upside. The overall ROI of the AI for the last 30 days was +5.02% against -1.41% of ETH.
Another market pair that Performer v2 recently started trading is CRV: USDT, and so far, he has been crushing it. On the Curve market, the AI was spot on when making buys at local minimums and selling at local maximums.
Despite the CRV price dropping by -18.11% in August, the Performer AI managed to deliver a +3.55% return for the same period, beating the market by more than 20%!
The performance of Performer v2 on ADA: USDT this month has been completely phenomenal. The AI followed the market on its way up and sold the position before it headed downwards.
The overall ROI of the AI for the last 30 days is +6.21% against -12.65% of ADA.
Recently, we started testing a new type of AI — Explorer, and so far, its performance has been quite stable and its behavior quite interesting. As we can see from its trade history on BNB: USDT, Explorer places the orders in “clusters” of buys and sells, averaging out entry and exit prices.
DCA is one of the commonly practiced ways to overcome market volatility, and the AI learned to do it entirely on its own. How cool is that? It was also worth noting that Explorer was one of the few AIs that exited positions and was fully in cash throughout Aug 15-Aug 29. Overall, the performance of Explorer on BNB: USDT for the last 30 days was +5.54% compared to the market of -1.74%.
Our AI approach to crypto trading has once again demonstrated to be a valuable tool for our investors. August was rough across the whole industry with the majority of the top coins losing between 10-20% of their value. Here is what our community has to say about the bots’ performance.
One of our investors shared incredible his incredible 200+ days of returns using the Performer v2 strategy.
While both Ethereum and Uniswap lost over -40% during this period, the AI was capable of producing +36.62% gains against ETH: USDT and +30.54% against UNI: USDT.
“Meanwhile at the competition. Not to mention this product is about 12x more expensive 🧐 (0.2% trading fees, setup and 1.5% withdrawal fees)” - Investor
Another one of OB’s investors shared his results against BNB: USDT and TRX: USDT, using the same Performer v2 strategy.
Both of his bots accumulated huge returns, while BNB went down by -40.19% and TRX moved up by just +1.65%.
Additionally to this, he shared one of his most recent bots, which utilizes the P2 strategy as well.
In just 10 days, the AI managed to gain an edge over the market, and return +20.33% against FTM: BUSD while the pair was trading at +15.83% at the time of sharing.
Another one of our investors saw almost instant results with an identical strategy in just two days.
His Performer v2 went to +10.45% in two days following the market swing and then sold to keep the profits. The cryptocurrency on the other hand went to lose some of the uptrend gains and was trading at +7.21% at the time of sharing the feedback.
“I am back! Stopped in Feb. this year and due to nice results again back in the game. New pay-as-you-go plan with a 60% / 50% discount. Good to be back!” - Investor A
“interesting market pairs” - Investor B
“Followed the pairs that were advised by the app.” - Investor A
“And a bit what I thought was a winner 😇” - Investor A
Using or not a stop loss is certainly one of the hottest topics right now on the OBC Discord, and we are looking forward to seeing how the different methodologies of our retail investors will pay out. Our take is that for riskier investments (e.g. everything except Bitcoin and Ethereum which can be called class A) we would suggest each investor pick his risk tolerance and use a stop loss or trailing stop loss based on that.
For Bitcoin and Ethereum, specifically, against which the AI has demonstrated pure dominance over the last 20+ months, it is debatable if would do more good or harm of using an external mechanism to the AI. Of course, every investor of the OBC app has full control over his capital, and how he uses the AI tools provided.
Our investor saw a very decent boost in his newly launched AI’s during the recent market dip. While MATIC went down by -11.69%, his trading bot held on to the +16.10% it had previously accumulated.
“Perfect example of how the bot trading mitigates market dips - this is for ADA: BUSD Performer V2” - Investor
On the performance from the left, we can observe a magnificent performance by the AI. Initially, the bot decided to hard “fold”, before jumping in on a sticking pattern from Aug 10 to Aug 13.
Afterward, another folding session happened in order to hold onto the gains before the dip in the market.
Above is an excellent example of what a prime trading AI’s performance should look like. After an initial “fold” to gain an edge on the dip of the market, the bot accumulated enough data to start its “shadowing” journey - returning +19.32% ROI in August, while the market went down by -14.88% over the same time period.
This wraps up our community feedback section and OB Capital’s August performance chapter of the report. This was another decent month for our investors. Both the short-term and long-term investments made a great return up to Powell’s speech and it even managed to save the portfolio’s from the maximum possible losses.
In our previous two reports, we highlighted the importance of having a working strategy during bear markets as that is key to both not losing money in crypto but also having free capital for when the prices start going back up again. The unpredictable downtrend towards the end of August will be marked as another case study for our AI.
To join the discussion on the One Button Capital Discord server, click here.
Disclaimer: This is not financial advice. This report is strictly educational and does not provide investment advice, solicit the purchase or sale of any assets, or encourage readers to make financial decisions. Please use caution and conduct independent research.
Practical evidence stands higher than theoretical theses, and the results we shared do the talking by themselves. At the same time, we think that it is valuable for our investors to learn how an AI-driven asset management machine works, as this is an innovative way of investing.
Our technology performs two vital tasks in portfolio management:
Portfolio distribution and asset management.
For portfolio management, we use neural networks—a form of narrow AI that can learn to do specific tasks designed by a human.
Portfolio distribution and asset allocation are vital tasks of every portfolio manager. The question here is:
How to allocate capital effectively between various cryptocurrencies?
Our answer:
We use neural networks trained on various baskets of portfolios to optimize the allocation process. The data used to train these models includes billions of combinations of asset buckets tested against billions of different market timeframes.
Using the real-time data received from the market, the models dynamically adjust the portfolio to optimize for better returns.
Additionally, the data from the performance of asset management models is used to optimize allocations.
Ongoing management of a portfolio is another critical task done by a portfolio manager. The question here is:
How to optimize holding the asset to generate returns better than the market?
Our answer:
We use neural networks to trade market pairs on spot and futures to generate returns better than the market. The neural networks are trained on various market pairs using historical market data.
A model can trade a single market pair. The models utilize real-time market data to make decisions to buy, sell, or hold a position.
To explain what One Button Capital trading neural networks are, first we need to understand what they are not.
Neural networks are NOT:
Then what are the characteristics of neural networks?
Neural networks are dynamic, adaptive, and self-learning. They possess the quality of expressivity, which gives an edge to OBC trading AI compared to rule-based algos. In machine learning terms, expressivity is the capacity of a neural network to perform different kinds of computations, therefore, be ready for changes in the environment.
Imagine neural networks as players and the market as a game. The goal of the players is to win the game. And winning the game means scoring the most profit with the least possible drawdown.
That makes it easier to explain the advantages of this technology compared to the alternatives. Since the goal of the models is not necessarily to predict the future price but to actually win the game, the decisions they make might seem unconventional at the moment but give an edge in the long run.
Read the full article.
This summer we had an excellent campaign in growing our marketing exposure. The team was present at four different events across Asia and I had the honor to be a speaker on three occasions. Here is a short summary:
Crypto Expo Asia - 22-23 June, Singapore
During the two days of Crypto Expo Asia we got:
250+ registrations for the OB Capital retail investment app
30+ signups for OB Capital asset management fund for institutional investors with a projected AUM of $35–40M
Blockchain Week - 25-29 July, Singapore
The development of blockchain technology is vital for the crypto industry, and it is essential that it keeps improving.
The crypto winter is not over yet but there are good indicators that we may be close to greener months.
To further help the digital revolution, I and the team represented One Button Capital at the 2022 Blockchain Week in Singapore in the final week of July.
Thousands of crypto enthusiasts and industry experts from different spheres of work were also present, and we made a great connection with them!
Blockchain Conference Ubud (by Favourse) - August 4, Bali
One Button Capital was present at this year’s Bali Blockchain Ecosystem Conference. Our goal was to network with other industry leaders, connect with like-minded investors, and discuss the newest blockchain innovations.
We had an OB Capital booth at the event and I was invited as one of the speakers.
Coinfest Asia - 25-26 August, Bali
Coinfest Asia 2022 was a phenomenal event. It is amazing to see the local crypto community grow and attract talent, capital, and aspiring web3 entrepreneurs from around the world.
As a featured startup of the event, we at One Button Capital had the pleasure to connect with industry leaders such as Binance, Flow Traders, NEAR Protocol, OKX, and many others.
We are looking forward to Coinfest Asia 2023.
Moving forward we are looking to keep growing our network in Asia and other parts of the globe. You can follow our campaigns by subscribing to our weekly newsletter. See you there.
We are growing our ranks! Recently, Peter joined One Button Capital as a Business Development Lead for the APAC region and will be responsible for growing One Button Capital’s presence in this area. Additionally, Peter will be conducting a set of online marketing activities, such as producing YouTube videos and arranging collaborations with KOLs and influencers.
Peter successfully represented One Button Capital at a few major events such as Blockchain Ubud Conference and Coinfest Asia 2022. He also created his first YouTube video and started communications with dozens of KOLs that could collaborate with One Button Capital in the next months.
If you are interested in joining the team, send an email to careers@onebutton.capital
This month we conducted a customer satisfaction survey and measured a Net Promoter Score (NPS) for the One Button Capital app users.
After 2 weeks of surveying, the final NPS score was 44. Based on Usersnap, everything above 30 is considered great. Therefore, we can conclude that the overall customer experience at One Button is commendable, although could use some improvement.
At One Button Capital, we always strive to improve 2 key things: trading performance and user experience. Hence, all changes to our products are aimed at achieving better investment returns and a simpler user experience for our customers.
Leave us a review on Trustpilot and share your feedback about using One Button Capital - https://www.trustpilot.com/evaluate/onebutton.capital
In August we introduced an improved exchange connection form that aims to simplify the process and ensure that all of the required permissions are enabled when linking your exchange account with One Button Capital via API.
To ensure that all investment portfolios on Binance that include BNB are managed correctly we have introduced a disclaimer to remind our investors to disable their automatic BNB fees. This way an overlap of the AI’s balance and Binance BNB balance can be prevented.
In order to simplify the exchange connection process, we have introduced an embedded step-by-step connection guide for each of the supported cryptocurrency exchanges.
2 of the most requested cryptocurrency exchange platforms are coming to One Button Capital’s app during September.
A new and improved version of one of the most used AI models on One Button Capital - Performer will become available for OBC’s lifetime users.
To ensure that our investors always have an edge over the market we will be introducing an automated mechanism to suggest and rebalance existing investment portfolios.
To further improve the trade history’s informativeness we will be introducing a set of new parameters indicating the strength of a certain AI signal and the current crypto/stablecoin ratio at the time of the trade
To remove the need to re-enabling the “Spot & Margin trading” option on each Binance API every 90 days we will be introducing a set of dedicated IPs that can be added to the API’s “whitelisted IPs”
To ensure that an exchange account is always successfully connected to One Button Capital we will be introducing an improved error detection mechanism that will address urgent problems.
We are happy to publicly announce that One Button Capital is in the midst of raising its $2.2mm seed round with the goal to improve AI technology, upgrading the online app, and grow marketing exposure.
Our vision at One Button Capital is to build an investment product that anyone in the world can use for growing their capital, regardless of their location, wealth level, or other circumstances.
We already validated the technology concept and created an easy-to-use web app. Now we want to improve upon it and scale it up.
The current investment round is open for individual and corporate investors with a minimum ticket size currently being $50k in exchange for equity in the business. The current deadline for new applications is September 30, 2022.
If you are interested to learn more and would like to see a pitch deck, send an email to ir@onebutton.capital or message me on Telegram - @maxyampolsky.
The financial world has advanced to a new level of sophistication, and everything we previously knew about market movements is gone. Even in crypto, a relatively new segment of the industry, the rules have changed. Once successful funds are underperforming in the current environment, losing their Alpha status, and opening the room for novel investment vehicles to take their place.
At One Button Capital, we strive to constantly stay one step ahead of the curve. Being one of the first (if not the first) to implement AI technology in crypto investing was not just a breakthrough for its time but also a key component in giving us an edge over the markets and competitors. The pace we gained in the last three years is here to stay.
Right now, wealth management is undergoing another major shift. Every month, unpredictability in economic news affects the fundamentals of investing. In addition, companies are catching up and are working on developing their own AI-trading software. It is a financial war.
For those who share our vision, right now is the opportunity to join the accelerating movement of fully automated, computerized, and machine learning-driven financial management.
Best regards,
Max Yampolsky, CEO at One Button Capital,
ir@onebutton.capital
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Disclaimer: This is not financial advice. This report is strictly educational and does not provide investment advice, solicit the purchase or sale of any assets, or encourage readers to make financial decisions. Please use caution and conduct independent research.
Interview of ONE BUTTON CAPITAL at Crypto Expo Dubai 2022. (2022, August 4). YouTube. https://youtu.be/xDNJx8gVpZc
We regularly prepare insightful reports and case studies about crypto trading and the blockchain industry.
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