Investment strategies

Peccala — Generating returns even during the bear market

June 17, 2022
3 min read

This week marked a milestone for Peccala. After having worked on our platform for months and the underlying trading strategies for years, we entered the closed beta phase exactly 3 months ago.

This means that we have invited a limited number of investors to be the first to use our product. The closed beta enables us to hone the user experience before granting everyone access to the platform.

In these 3 months, we’ve managed to:

  • reach an AUM of $2.3 million and,
  • generate 1.8x returns in a very tough crypto market.

In order to understand how we were able to achieve these results, you first need to understand how our algorithms work.

The Peccala algorithmic trading engine predicts the probability of an existing trend being amplified. Note that we’re not predicting new trends… as predicting the emergence of trends ex nihilo is not realistic.

As a consequence, two things need to be true for our algorithms to make a decision:

1/ A trend must exist already

2/ Our computations must estimate that said trend is going to be amplified.

Therefore, and contrary to what many recommend, we don’t “buy the dip” and “sell the rally”. Instead, we buy when prices are high and we expect them to be even higher. As counterintuitive as it may sound, we built solid algorithms that have consistently benefited from this approach.

The trends we analyze are not limited to upward trends. By using derivatives, we can equally benefit from bear market (by going short) and from up markets (by going long). Furthermore, our algorithms are totally symmetrical, which means that a market that loses its value by half would be equally profitable as a market that doubles its value.

Derivatives give us market neutrality (the above trend independence), but their use requires very specific skills to become profitable. In an up market, an inexperienced investor making random choices on the spot market will very likely be profitable. However, even in that up market, the same inexperienced investor will lose money if derivatives are used, as the investor will be wrong half of the time. Winning and losing half the time flattens the performance regardless of how the market is behaving, and eventually, the money is consumed by fees.

Now that we’ve explained a bit more about our algorithms, how did we indeed achieve 2x returns during the crypto bloodbath in May?

A combination of things. Markets were down, our algorithms predicted further decrease, and then… TerraUSD went through an insane death spiral, momentarily destabilizing the entire crypto market to an unexpected level, resulting in our returns peaking at 2.25x on May 13, 2022.

Naturally, our algorithms couldn’t have predicted what happened with TerraUSD, and sometimes things do not align well… As an example, last year our algorithms were shorting the market, and a tweet from Elon Musk temporarily reversed the trend. A tweet is likely to have a temporary effect even in a young market like crypto, and markets eventually adjust, so our algorithms ignore these effects. However, some events truly trigger a market reversal, and as the trend switches out, algorithms adjust accordingly, in a dynamic manner.

Why is Peccala the ideal way to start investing in crypto?

Markets are incredibly complex, often counterintuitive, but we offer a turnkey solution that actively manages our users’ money 24/7, in a way that has been proven to be historically efficient.

Peccala opens up investment in crypto to everyone by offering an effortless and seamless user experience with as little as 200$ starting capital. No previous knowledge is required!

The open beta phase of our product will follow later this year. Peccala will then be available to anyone who joined our waitlist. Don’t miss out on being part of the experience and join our waitlist today!

Peccala is on a mission to make crypto investing an effortless, enjoyable, and profitable experience for investors of all levels and backgrounds.

This vision is backed by early-stage VC fund Antler and five forward-thinking angel investors.