Altcoin Portfolio Management in a Bear Market

Portfolio Allocation

It’s rare that you hear an altcoin trader talking about position size but it’s way more important than picking the right coins at the right time.

How Active an Altcoin Trader Are You?

Next, consider how frequently you want to be rotating your positions based on signal shifts.

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Less Ideal Exit Strategies

Let’s say you get a bad setup. The market just doesn’t move in your direction? What to do?

  1. Sell half after X days of price moving against you. (a visual backtest is helpful for this scenario; how many days does a winning trade take to get into profit?
  2. Sell the full position when the signal moves from Buy to Sell.
  3. HODL and wait for break even (you’d be surprised how frequently this happens).
Often times a bad trade will allow you an exit point before the real negative price excursion begins.

Build an Uncorrelated Altcoin Portfolio

Although the common understanding of crypto is its highly correlated to TradFi and for the most part this is still true. There is a real possibility of holding several altcoins at once that are uncorrelated to BTC and Stonks.

Most of these are unavailable at Binance or FTX so be aware of the shitcoin exchange liquidity risks.
Correlation above .3 or below -.3 is the equivalent of adding leverage to a spot position so it’s best to remove 1 of 2 that have a high rating.

Position Size Allocation for a Long Only Portfolio

I keep this very simple. Let’s say I have 10k of USDT or BTC or Eth to allocate to this strategy.

Long Short Portfolio Allocation

For a Bear Market or Range bound market environment, it is ideal to have a mix of both Long and Short positions. We already covered how to build a portfolio of long-only altcoins. With a mix of short positions, we would have to reduce our average position size by half.

Fresh weekly short signals on CoinRotator for a balanced portfolio

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