Info about ClearGate strategies on Sommelier protocol
Trend following portfolio in ETH and BTC
Strategy description: The strategy accumulates BTC and ETH with a medium to long term perspective. The rebalancing decision between BTC and ETH is based on following price trends.
Momentum portfolio in ETH and BTC
Strategy description: The strategy accumulates BTC and ETH with a medium to long term perspective. The rebalancing decision between BTC and ETH is based on price momentum.
Differences between the strategies
The following information outlines the differences between two distinct BTC and ETH portfolio strategies and may help in choosing between ETH-BTC Trend following portfolio (Trend) and ETH-BTC Momentum portfolio (MoM).
- Trend follows price trends, MoM accumulates assets by their price momentum
- MoM reacts faster to price rises than Trend because identifying price trends with greater accuracy takes more time than observing price movements
- Its faster reaction to price appreciation means the MoM strategy may make more trades that do not end profitably
- MoM always holds some risky assets whereas Trend does not hold any risky assets when no positive or neutral price trend is detected
- Trend provides less volatility and more stability at times when prices are falling
- MoM may outperform Trend in the short run and when prices are rising fast, but Trend should outperform MoM in a longer time frame and offer better risk-return characteristics