The currency of the main online line is not fast selling? Historical data tells you that this is the most reasonable

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For professional investors or fund managers who are actively managing, their investment level is generally measured by "extra rate of return | Alpha" (α), which means that the income exceeds the "baseline income | Benchmark". The benchmarks for each market are different. The US stock market will use the S&P 500 as the benchmark. Most of the currencies are based on Bitcoin.

If you want to exceed the benchmark revenue of the entire market, there are generally several ways:

  • 1. Better and faster investment decisions than competitors
  • 2. Use information asymmetry to gain advantage
  • 3. Adjust strategies in a timely manner to promote better returns
Regardless of the type of investment tool you use, the conditions for generating Alpha are usually the same. There may be several specific strategies:
  • 1. Fundamental analysis, assessing undervalued or overvalued assets, then doing more or shorting
  • 2. Quantitative strategies to make faster investment decisions through proprietary (rather than public) algorithms
  • 3. Arbitrage / moving bricks, making price difference through price difference in different markets
  • 4. Macro strategies, such as policy adoption, and industry trend judgments
  • 5. Driven by events, such as project launches, company mergers or acquisitions, etc.
According to Messari's understanding of coin market investors, they will prefer a combination of "macro strategy" and "event-driven" investment strategies.

The widely used indicator in the fundamental analysis of the current currency market is also the NVT [1], similar to the concept of PE (P/E ratio) used in the stock market [2]. Quantification and arbitrage require certain skills, the market is not mature enough, and the overall transaction size is limited.

Recently, many investors are exploring “event-driven” as a forward or reverse trading signal, for example:

– New currency on the exchange

– Production (block reward) halved

– Technology development to a milestone

– Product roadmap update

The focus of this article is to review the performance of the currency before and after the "main network / test online line".

When the product is approaching the official launch, that is, the token can have a role other than speculation (such as ETH can be used to execute smart contracts, MKR is used to participate in autonomy, etc.), the real value generated should be reflected in the price of the token. .

We are also curious as to whether this is a reusable strategy that can lead to excess returns.

The following surveys are based on several well-known main online and test online lines, and some of the results are statistically significant. The covered currencies are based on base chain or protocol layer products, and are more representative: EOS, Tron, Tezos, VeChain, Aion, Zilliqa, Ontology, Waves, Qtum, Augur, ICON, 0x, NEO, BNB.

Let's assume there are 4 scenarios:

  • 1. Buy one week before the main network/product goes online and sell it on the same day.
  • 2. Buy on the day before the main network/product goes online and sell on the day of the launch.
  • 3. Buy on the main network/product online, sell on the second day of online
  • 4. Buy on the main network/product online, sell it one week after going online
Referring to the figure below, the median benefit of the first scenario is 1.9% , which is statistically insignificant. Compared to the same stage of bitcoin revenue, it is a less significant 0.3% .

However, for the fourth scenario, there is a clear difference. Ten of the 14 projects were negative (in 7 days) with a median of -7.5% , and the median of the decline was increased to -8.9% in bitcoin .

Many people will think that the main online line means that the product will fall, which may lead to at least one week of increase. But in fact, most traders' behavior tells us that they will sell when they go online and then start looking for the next deal.

Similarly, a similar conclusion can be obtained by changing the main online line of the above four conditions to the test online line. The median return for the first scenario was 1.8% , which is about 1.9% of the main online line. The income of scenes three and four is negative, and the difference is also relatively large.
One possibility for price fluctuations between the main online line and the test online line is that investors have different opinions on testing online lines. Some people think that this is a very important milestone in the product roadmap, while others may think that it is just a patchwork of small features, so it is not at ease.

Another possibility is that the token in front of the main online line is just a substitute that can be used only for "speculation" without any function, so the fluctuation will be even bigger. In the world of cryptographic assets, there are too many ways to earn excess returns, but the methods summarized in this article are old-fashioned and used badly in the stock market:

"Buy in the rumor stage and sell when the announcement is made"

Change to the context of the currency market, you can also adjust to:

"When you buy at a time, you must sell at least when you go online."

Supplementary explanation
[1] The full name of NVT is the Network Value to Transactions Ratio, which is the ratio of the total market value to the daily volume on the chain.

[2] P/E ratio (PE) is one of the commonly used indicators to assess whether a stock price level is reasonable, divided by the stock price divided by the annual earnings per share (EPS).

Content and data sources:


Produced|Coin Kaqiu (ID: bikaqiu_official)

Compilation | Pan Zhixiong