Zignaly Providers Monthly Recap (December)

CryptoLivermore
4 min readJan 9, 2023

TL;DR
December has been a pretty dead month in crypto in terms of volatility, with the exception of the very last few days when BTC has been giving some signs of life. Is this the time crypto is finally back at it?

The ETH Futures Provider is facing its worst drawdown ever ☠️
Is this something we need to worry about? Let’s put things in perspective.

Providers
BTC Futures
While BTC has experienced a net percentage change during the entire month of December equivalent to -3.59%, which in crypto is basically the equivalent of a flatline, we have witnessed a slight increase in upside volatility during the very first days of the new year (happy new year btw!).

Will this be the real deal that finally ignites the move that we have all been waiting for months? Nobody knows of course. What we can say for certain by zooming out and looking at the chart is that BTC will have to first overcome some significant resistance levels (yellow line) before it can get anywhere above the $18,500 mark.

ETH Futures
While the BTC Futures Provider has been struggling but containing the current drawdown pretty well, the ETH Futures Provider is officially experiencing its worst drawdown ever after the one experienced (but only during backtesting) in 2016, which was equivalent to -43.18% vs the current -45.91%.

So what does this mean for the strategy moving forward? Absolutely nothing, but let me explain why. While the timing of the lunch for this provider in October 2021 could have not been worst in hindsight, right before the start of the bear market (the joke will forever be on me for this but I don’t have a crystal ball sorry), the good news is that the system has been performing exactly as expected and 100% according to the forward testing that I keep running in real time.

Forward testing equity curve since the inception of trading on Zignaly for the ETH Futures Provider

Although it sucks that we haven’t seen what this Provider is capable of in positive terms yet, I was fully aware, and I suppose the people following it as well, that with this system high levels of volatility are to be expected, which means potentially higher profits, but also potentially deeper drawdowns and overall high volatility in the equity curve.

To put things in perspective as suggested at the beginning of this review, let’s look at our previous worst drawdown, the one the system experienced in 2016. In that case too the strategy didn’t have a lucky start, getting into a drawdown right out of the gate, which lasted for about the first 6 months.

However, as you can see, giving it enough time and the right market conditions (this sideways won’t last forever), the system was capable of not just recovering the drawdown but generating so much profit that it was no longer visible on the equity curve.

So, although I know I have been repetitive in these past months, our job remains the same: take our trades, be patient, and wait it out until this whipsaw type of market will finally come to an end.

Conclusions
If you have any inquiries, suggestions, or doubts, feel free to DM me on Twitter or Telegram, or check my other Medium articles and Guides.

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CryptoLivermore

I am a full-time trader specialized in the crypto markets, now offering crypto copy trading services