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Over the Christmas break I realized I was spending close to 5 hours a month manually rebalancing my portfolio of ~20 cryptocurrencies weighted by market cap.
I got sick of that pretty quickly so I decided to make a bot that uses Binance’s API to automatically handle that.
A few months later, I’m releasing the hosted version of the bot. Now anyone can put their trade-only API keys into HodlBot, and it will automatically trade into the top 20 cryptos. It will also handle monthly rebalancing automatically.
What does the algorithm do?
The algorithm takes the top 20 coins and assign each coin a % allocation based on their weighted market capitalization.
Then it caps every coin to be at most 10% of the total portfolio value. Anything above 10% gets redistributed to all the coins below by weighted market capitalization until the entire sum of the portfolio adds up to 100%.
What do I need to get started?
1. Binance Account 2. Binance Trade-only API Keys 3. $200 in cryptocurrencies
How much are Binance transaction fees on monthly rebalancing
Average transaction fees were 0.26% over a 3-year period.
How much does it cost?
For the first month it’s $1. Afterwards it’s $10 per month. No % fees.
How can I trust HodlBot with my API keys?
We encrypt the keys on our end. Also we don't require withdrawal permissions, just trade-only.
In the next month we’re releasing a version of the app that never stores API keys server-side and only executes trades in the browser. After that, we’ll be releasing an electron app so you can store your API keys on your local computer.
More Info
https://medium.com/@AnthonytXie/hodlbot-cryptocurrency-inves...
1. Weighted proportionally by market capitalization
2. Weighted proportionally by market capitalization but capped at a certain %
3. Weighted by square root of market capitalization
Capped and other weighting methodologies theoretically should diversify risk and reduce volatility. But if there is strong positive covariance between coins, then volatility is not necessarily being reduced in the index as a whole.
What do you guys think? I gave it my best shot and blogged about it here:
https://medium.com/hodlblog/hodlbot-cryptocurrency-investing-on-autopilot-dce2e4c9a7f7