Why trade the LINK to ETH ratio?
Many crypto traders choose to trade higher beta tokens to accumulate more ETH or BTC. LINK is one such cryptoasset with a high correlation to ETH with more volatile price movements. Trading the LINK/ETH ratio allows traders to stay 100% exposed to crypto while taking advantage of changes in LINK relative to ETH price whenever prices are not as correlated with each other.
At a high level, if the LINK to ETH ratio falls below support, LINKETHRSI rebalances 100% LINK into ETH expecting ETH will continue outperforming LINK. Conversely, if the ratio rises above resistance, the Set rebalances into LINK expecting LINK will continue to break out against ETH.
LINKETHRSI attempts to capture large oscillations in the LINK to ETH price and can be primarily used to accumulate ETH for ETH holders.
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 LINKETHRSI Set against holding 100% ETH over the last 2 years, assuming a slippage rate of 1% during each rebalance. The model shows the Set would have outperformed over the given historical time period and been subject to the volatility of LINK and ETH prices.
The chart below illustrates the ETH that would have been accumulated using the LINKETHRSI Set vs a buy and hold strategy 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 ETH hourly data sourced from CoinGecko. In production, the LINKETHRSI Set rebalances based on MakerDAO’s ETH/USD and ChainLink's LINK/USD price oracles. If you’d like to play around with the data yourself (and tweak the parameters), feel free to fork the spreadsheet here.
What are the additional criteria needed to trigger a rebalance?
The RSI updates once every 24 hours at 8:00pm UTC, so a rebalance is kicked off approximately the same time each day if conditions are satisfied. Rebalances for this Set take ~60min to settle. There is no confirmation period unlike moving average Sets.
View the LINK/ETH RSI Ratio Trading.