Frequently asked questions
Frequently asked questions
The Risk Model
Multifactorial Design & Input Variables
The Risk Model is multifactorial, meaning it considers vast amount market factors and data points to compute the risk. Some key attributes include asset growth models for capturing asset-specific patterns, regression to model time and seasonality, and traditional TA metrics for price-based classification.
The model is self-adjusting, updating and refining itself daily as new data becomes available. This continuous improvement enhances its accuracy and confidence level over time. The algorithm is powered by a range of techniques including data analysis, statistical modeling, and automation.
Historical vs. Live Data
It’s crucial to understand that while the algorithm improves daily, the historical risk levels reflect the data shown on our live risk meter for each specific day. The model is not retrofitted or predictive; it classifies the current price on a daily basis.
Naturally, the exact mathematical components of our model remain proprietary. However, you can dive a lot deeper into its build, input variables, and other attributes in our whitepaper.
Proof of Profit (PoP) Framework
Before publishing any metrics or indicators, we subject them to our rigorous testing environment known as Proof of Profit (PoP). As a member, you gain access to detailed and interactive charts that show how our Risk Model has performed historically.
- Dataset Optimization
The first step in PoP involves meticulous dataset sourcing and comparison. We prioritize reliable and diverse datasets while mitigating challenges like multicollinearity, biased data, and potential data gaps.
- Backtesting & Benchmarking
Our model undergoes extensive backtesting, benchmarked against three widely recognized trading and investing strategies: HODL, DCA, and a trend-following strategy. You can view these backtesting results in our whitepaper.
- Forward-and Stress Testing
The model is subjected to various simulated scenarios and stressful environments to evaluate its resilience. This step allows us to assess how the model performs under a wide variety of future price trajectories. AlphaSquared is the only platform in the crypto space currently offering this level of forward-testing capabilities. You can inspect this approach in our Whitepaper.
No. The model does not predict what will happen in the future, as history has proven that predicting market movements is not productive. Instead, the uniqueness of it lies in its ability to tell you what is happening right now.
The model computes the current market risk with high precision. This means that whenever the market is overheated, or oversold, the model will tell you. It cannot tell when in time that will occur. Being a macro model, this gives you more than enough time to either calmly DCA out of the market and take profits, or reduce your investments. This same principle also applies to major bottoms.
In short, you invest more when the risk is low, and less when the risk is high, or take profits if you wish. This earns you more BTC per dollar invested and reduces your risk.
You can follow pre-constructed strategies available in the member dashboard, or create your own strategy which is suited to your personal risk tolerance and goals.
We are a team of two academics with a background in economics and computer science at the Universities of Trondheim and Basel. We have a common background in Investing and quantitative analysis. In addition to our academic background, we have previous experience in web development and programming. Read more about us here.
In 2020 we separately began our search for effective risk metrics and indicators. We were looking for something that was taking a multitude of factors into account, and that wasn’t subject to interpretation and biases. The search did not yield any productive results.
During 2021 we had both ended up constructing our own risk metrics, independent of each other. Through fate and a stroke of luck, internet brought us together. We were very active in various forums trying to improve our metrics and bring them to the next level.
We quickly saw the potential in our common goal, and decided to team up. After months of programming, testing, and developing, we finally had the metric we had been looking for since 2020 – The Risk Model
Membership & Payments
Simply visit your user dashboard, select membership and click on “change membership”.
Please contact support.
Yes. We will be applying the principles of the Bitcoin Risk Model to other coins. Eventually we will introduce other assets classes such as stocks and equities. Become a member in order to lock in a lower monthly price and get all future metrics, coins, and assets without ever paying an extra cent on top.
As many as you like!
We are heavily invested to make sure our metrics live up to the highest standards. We are already experimenting with components for the next metric, but this is a resource intensive process and we are not in a rush. Quality ensuring and optimisation is a top priority. Whenever the next metric is on it’s way, you will see it announced in your member dashboard.