It might seem that the volatility of digital asset prices and the speed of light with which cryptocurrency markets move would mean that those who act the fastest guarantee the heaviest rewards.
And, in certain cases, this is true – for example, when an ad listing a token in Coinbase or Binance first becomes public, and the asset’s price line becomes nearly vertical.
But in many cases, the turtle beats the hare.
This principle is clearly at work when it comes to traders who use quant-type tools to improve their decision making. One example is the VORTECS™ Score, an algorithmic comparison between historical and current patterns of market and social activity around a currency.
Although the VORTECS ™ algorithm is trained to detect historically optimistic conditions around cryptocurrencies, high scores are rarely followed by price spikes immediately.
In fact, the highest returns consistently arrive in the next few days after peak scores appear. What does this reveal about the nature of the cryptocurrency market?
The early bird catches the worm (but waits to eat it)
Available exclusively to subscribers of Cointelegraph Markets Pro , the VORTECS ™ Score is an indicator powered by artificial intelligence that looks for historical similarities in a multidimensional set of variables. This includes changes in a cryptoactive’s price, trading volume, social sentiment and tweet volume, among others.
The higher the VORTECS™ score, the more confident the model will be that the observed combination of key metrics around the token resembles past conditions that foreshadowed significant price increases.
Scores above 80 are considered bullish, while a rarer view of a 90+ score suggests that the asset’s outlook is tremendously favorable, judging by its all-time record for price action.
The timing, however, is intentionally confusing as the model is designed to detect conditions that preceded rallies by 12 to 72 hours. In fact, while the algorithm is designed to signal high conditions as early as possible, it consistently delivers the best results to cryptographers in a matter of days rather than hours.
Historical data shows that, on average, assets scoring high on the VORTECS™ score deliver consistent, albeit small, returns as soon as six hours after reaching scores of 80, 85, and 90.
Thus, cryptocurrency investors who rely on Markets Pro data to refine their trading strategies are often tempted to take profits early. The same data, however, suggests that it often makes sense to hold steady rather than grab early gains.
HODL, even for a day or two?
The table below presents the average returns after a cryptoasset cleared a score of 80, 85, or 90 in one week. Each asset could only produce one observation per day, that is, if a coin went from 79 to 81, then back to 79 and then back to 80 again in a few hours, only its first entry to 80+ would count.
As seen in the table, the more time passes after assets cross the 80, 85 or 90 VORTECS ™ Score threshold, the more likely they are to deliver higher returns.
While these statistics only reflect price movement in a single week, the pattern is actually observed very consistently throughout Markets Pro’s history, which dates back to early 2021.
In fact, 48 hours is not the limit. When it comes to ultra-high scores above 90, some Markets Pro subscribers report that they generate consistently large earnings by holding those coins for an entire week, or 168 hours.
These observations suggest that the encryption market might not be as chaotic and capricious as many believe. While many moves are clearly driven by waves of FUD and hype, the broader digital asset market exhibits identifiable regularities – and recurring patterns of business and social activity that can take days and weeks to build up before asset prices change.
The Cointelegraph Markets Pro VORTECS ™ score is simply a way to identify the conditions leading to these movements – as early as possible. It is up to the individual trader to decide when to take profits.
Cointelegraph Markets Pro is available exclusively to members on a monthly basis for $99 per month, or annually with two free months included. It carries a 14-day money-back policy to ensure it meets subscribers’ investment research and cryptographic trading needs, and members can cancel at any time.
Cointelegraph is a financial information publisher, not an investment advisor. We do not offer personalized or individualized investment advice. Cryptocurrencies are volatile investments and carry significant risk, including the risk of permanent and total loss. Past performance is not indicative of future results. Figures and graphics are correct at time of writing or as otherwise specified. Strategies tested live are not recommendations. Consult your financial advisor before making financial decisions.
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