How does the Link RSI Set work?
The LINK RSI Set implements a crossover strategy on the ChainLink Relative Strength Index oscillator indicator. Learn more about RSI and other oscillators here.
On a high level, if the LINK daily RSI falls below support at 45 when the Set is in 100% LINK (price loses momentum), LINKRSI rebalances LINK into cash (USDC) and if the LINK RSI breaks above resistance at 55 when the Set is in 100% USDC (price regains momentum), LINKRSI rebalances back into ETH. LINKRSI uses the daily RSI which means there is no confirmation period for rebalance signals. See the chart below:
Why use the RSI?
RSI is one of the most popular trading indicators to determine when to enter and exit positions by measuring price velocity and momentum of past periods.
RSIs are oscillators, a category of technical indicators separate from moving averages. Compared to moving averages, RSIs typically do not make excess trades in choppy and horizontal markets.
Advanced traders typically use RSIs and moving averages in combination to create more accurate entry and exit points for trades.
How does the Set perform?
Disclaimer: The content below is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. The content below is provided for educational purposes only, and not indicative of future performance. None of the following should be interpreted as investment advice. The tools used below follow a predefined set of parameters and aren’t actively managed by Set Labs Inc.
This chart below compares the hypothetical performance of holding the LINKRSI Set against holding LINK over the last 3 years, assuming a slippage rate of 1% during each rebalance. The model shows LINKRSI would have outperformed over the given historical time period and underperformed in the LINK rally in mid 2019.
The chart below illustrates the ETH that would have been accumulated using the LINKRSI Set following the same assumptions above.
Finally, the chart below illustrates the LINK that would have been accumulated using the LINKRSI Set following the same assumptions above.
It’s important to keep in mind the the charts above are based on a number of assumptions and are only meant for illustrative purposes. As always, past performance is not indicative of future performance.
These charts use generated LINK daily data sourced from CoinGecko. In production, the LINKRSI Set rebalances based on ChainLink's LINK price feed, which may output different results. If you’d like to play around with the data yourself (and tweak the parameters), feel free to fork the spreadsheet here.
How is RSI calculated on TokenSets?
The ETH RSI is calculated using the on-chain ChainLink LINK price feed for the past 14 days at 8:00 pm UTC each day. Therefore, the RSI only updates once every 24 hours. Link to technical documentation of the RSI oracle here.
What are the additional criteria needed to trigger a rebalance?
The RSI updates once every 24 hours, so a rebalance is kicked off approximately the same time each day if conditions are satisfied. There is no confirmation period unlike moving average Sets.
How long does the rebalance take to complete?
Rebalances for the LINKRSI take approximately 40 minutes to complete. Price drift is on average <1% over the course of 2 hours based on historical ChainLink LINK price data. Learn more about Set rebalances here and our TWAP Rebalancing feature here.
View the LINK RSI Set.