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A proprietary index to measure trend strength of the "Crypto" environment.
LAST UPDATE: 2023-04-01 20:30:00
|TOTEM CRYPTO INDEX||6||1||1||4||-4||-3||4||-1||0||1|
The Totem Crypto Index (TCI) portfolio is based upon the Top 30 (by Market Cap) cryptocurrency instruments noted on the CoinMarketCap website. We ignore "stablecoins" and will update on a quarterly basis or as we deem necessary without any prior notice as these rankings are fluid, changing daily. We assign each portfolio instrument a value representing our measure of trend "strength" using our proprietary 3-factor model designed to capture momentum and trend. A full short bias has a score of -100, a full long bias has a score of +100, and there are four waypoints in between.
Unlike the diverse portfolio of futures instruments in our Totem Trend Index (TTI) where we have no long or short bias and use the average absolute value of these scores, since we are dealing with only one market sector here we are instead computing the simple mean of the values to derive the Totem Crypto Index (TCI). For a primer on this process, we discussed in some detail on the Trading Futures with Anthony Crudele show.
We have traded Cryptos for our personal accounts since 2017. As traders, if there is enough liquidity for us and price movement to capitalize on, we will trade on most anything. Recognize though that these things should be treated like nitroglycerin and must be handled with extreme care, which is why we initially risked only 0.30% of our own investment portfolio in this highly-speculative and still nascent market. PLEASE NOTE ADDITIONAL IMPORTANT WARNINGS BELOW.
We do not trade Cryptos on behalf of investors, nor do we offer cryptocurrencies in any of our CTA Programs at this time. We would, however, be pleased to extend our Consulting Services to Qualified Investors if you would like to leverage our expertise in trading and risk management to help get started in this high-risk, high-reward arena. In our opinion, based upon our trend following research processes, decades of market observation and with some major caveats best discussed in person, and with the understanding that past performance is of course no guarantee of future returns, Cryptos have exhibited behaviour which seems to be well-suited for trend following strategies, albeit with some slight modifications. Moreover, it seems very likely that traditional exchange-traded futures on digital assets will soon be finding a role to play in many investment portfolios in the years to come. To the extent that the economic function of futures markets is to transfer risk, we would support and welcome these emerging opportunities.
Don't be a screen scraper! We can see you doing so. And if we can see you, don't you think that also means we can block your IP address? If you find this information useful, contact us to discuss consulting arrangements where we may provide clean and current data files via FTP at the end of every trading day.
ADDITIONAL IMPORTANT WARNINGS IN THE TRADING OF VIRTUAL (CRYPTO) CURRENCIES AND DIGITAL ASSETS
The unique risks in trading Cryptos are substantial, and include but are not limited to:
|Unique Features of Virtual Currencies|
Virtual currencies are not legal tender in the United States and many question whether they have intrinsic value.
The price of a virtual currency is based on the perceived value of the virtual currency and subject to changes in sentiment, which make these products highly volatile. Certain virtual currencies have experienced daily price volatility of more than 20%.
|Valuation and Liquidity|
Virtual currencies can be traded through privately negotiated transactions and through numerous virtual currency exchanges and intermediaries around the world. The lack of a centralized pricing source poses a variety of valuation challenges. In addition, the dispersed liquidity may pose challenges for market participants trying to exit a position, particularly during periods of stress.
The cybersecurity risks of virtual currencies and related "wallets" or spot exchanges include hacking vulnerabilities and a risk that publicly distributed ledgers may not be immutable. A cybersecurity event could result in a substantial, immediate and irreversible loss for market participants that trade virtual currencies. Even a minor cybersecurity event in a virtual currency is likely to result in downward price pressure on that product and potentially other virtual currencies.
|Opaque Spot Market|
Virtual currency balances are generally maintained as an address on the blockchain and are accessed through private keys, which may be held by a market participant or a custodian. Although virtual currency transactions are typically publicly available on a blockchain or distributed ledger, the public address does not identify the controller, owner or holder of the private key. Unlike bank and brokerage accounts, virtual currency exchanges and custodians that hold virtual currencies do not always identify the owner. The opaque underlying or spot market poses asset verification challenges for market participants, regulators and auditors and gives rise to an increased risk of manipulation and fraud, including the potential for Ponzi schemes, bucket shops and pump and dump schemes.
|Virtual Currency Exchanges, Intermediaries and Custodians|
Virtual currency exchanges, as well as other intermediaries, custodians and vendors used to facilitate virtual currency transactions, are relatively new and largely unregulated in both the United States and many foreign jurisdictions. Virtual currency exchanges generally purchase virtual currencies for their own account on the public ledger and allocate positions to customers through internal bookkeeping entries while maintaining exclusive control of the private keys. Under this structure, virtual currency exchanges collect large amounts of customer funds for the purpose of buying and holding virtual currencies on behalf of their customers. The opaque underlying spot market and lack of regulatory oversight creates a risk that a virtual currency exchange may not hold sufficient virtual currencies and funds to satisfy its obligations and that such deficiency may not be easily identified or discovered. In addition, many virtual currency exchanges have experienced significant outages, downtime and transaction processing delays and may have a higher level of operational risk than regulated futures or securities exchanges
Virtual currencies currently face an uncertain regulatory landscape in the United States and many foreign jurisdictions. In the United States, virtual currencies are not subject to federal regulatory oversight but may be regulated by one or more state regulatory bodies. In addition, many virtual currency derivatives are regulated by the CFTC, and the SEC has cautioned that many initial coin offerings are likely to fall within the definition of a security and subject to U.S. securities laws. One or more jurisdictions may, in the future, adopt laws, regulations or directives that affect virtual currency networks and their users. Such laws, regulations or directives may impact the price of virtual currencies and their acceptance by users, merchants and service providers.
The relatively new and rapidly evolving technology underlying virtual currencies introduces unique risks. For example, a unique private key is required to access, use or transfer a virtual currency on a blockchain or distributed ledger. The loss, theft or destruction of a private key may result in an irreversible loss. The ability to participate in forks could also have implications for investors. For example, a market participant holding a virtual currency position through a virtual currency exchange may be adversely impacted if the exchange does not allow its customers to participate in a fork that creates a new product
Many virtual currencies allow market participants to offer miners (i.e., parties that process transactions and record them on a blockchain or distributed ledger) a fee. While not mandatory, a fee is generally necessary to ensure that a transaction is promptly recorded on a blockchain or distributed ledger. The amounts of these fees are subject to market forces and it is possible that the fees could increase substantially during a period of stress. In addition, virtual currency exchanges, wallet providers and other custodians may charge high fees relative to custodians in many other financial markets.