We are finishing another year of Senti-Bot’s operation in the marketplace of emotions, and we look forward to 2024 with great gratitude. Thanks to you – our customers and partners – we were able to develop Senti-Bot together, providing a valuable solution and helping to better understand market emotions. It is your trust, feedback and commitment that motivates us to continuously improve. We are happy to take stock of what has been achieved in 2024, and we are optimistic about the future. Without further ado, let’s move on to a summary of Senti-Bot’s activities in the past year!
Table of Contents
Video Summary (Polish version)
Let’s recall what Senti-Bot is
Our investment philosophy
- During the development of the Senti-Bot tool, we followed the following investment principles:
The main objective of Senti-Bot is to limit losses, and generating profits is a secondary objective. We believe that this approach in the long term allows in achieving success from investments. - Repeatability of results is key, so any improvement to the tool focuses on maximizing portfolio metrics such as Sharpe and Calmar ratios.
- Every decision in the Senti-Bot strategy must support long-term results.
Senti-Bot’s performance in 2024
We ended 2024 for Senti-Bot in the cryptocurrency market with an impressive gross score of 72% (in red). We provide this result to enable comparison of Senti-Bot’s efficiency with other tools available on the market.
After taking into account the commission costs of the Binance exchange, the total net return was 64% (in blue). The total net return achieved since the project’s launch in January 2023 was a total of 317%.
We consider this result satisfactory, especially considering the volatility and risks that investors in the cryptocurrency market faced in 2024, as we write below.
During the year, we updated the strategy sewn into Senti-Bot, which took place after the big drop recorded in April 2024. We do not want similar situations to occur in the future. The new strategy made up for the decline in three months!
However, we are not resting on our laurels – we are constantly developing to create the best tool for you, which will meet your expectations.
The main objective of Senti-Bot’s strategy is to minimize losses first and only secondarily to generate profits. The chart below shows the maximum decrease in the value of the portfolio in December, the so-called “loss”. drawdown. Despite declines in the price of bitcoin, which at its peak was 13%, it eventually managed to reduce it to -5%.
Despite a 5% drop in the portfolio’s value from its peaks in December, the final result for the month was an impressive 8.4%! Thus, we are already continuing a 6-month series of increases in the value of Senti-Bot’s portfolio. In addition, this month we managed to beat the result of Bitcoin, which lost 3% in value in December. Nevertheless, we emphasize that we do not care to directly compare Senti-Bot’s performance with that of Bitcoin, as we believe that our approach is not to passively follow the market, but to actively respond to changes in emotions among investors.
Senti-Bot’s goal is to mitigate risk and maximize profits regardless of the direction of the cryptocurrency market, which differentiates us from simple “buy and hold” strategies.
Senti-Bot achieves its effectiveness primarily by pre-emptively closing positions ahead of anticipated declines in Bitcoin’s price, which were discernible from analysis of emotions expressed on social media. The effectiveness of this approach is confirmed by the average values of transactions ending in profit and loss:
- The average profit per order is: +1,77%,
- The average loss per order is: -0,36%.
Senti-Bot performance indicators
We emphasize that the effectiveness of Senti-Bot should be considered over a period of more than one or two months.
Important elements of evaluating the effectiveness of our tool are measurements of such indicators as:
- Drawdown
- Profit Factor
- Sharpe ratio
- Calmar indicator
Drawdown
Drawdown is, simply put, the largest percentage reduction in the value of capital from its highest level. It is calculated by comparing the highest previous level of capital with its current value.
The maximum drawdown over the entire period for the CryptoPulse BTCUSDT strategy was -19.11%, which occurred in April. We had already introduced updates to the Senti-Bot strategy on April 30, and the drawdown has been systematically reduced since then (see chart below).
By comparison, the maximum drawdown for the Bitcoin hodling strategy was as high as -29.6%, showing Senti-Bot’s clear advantage in managing risk and protecting your capital.
Profit Factor
Another measure that deserves attention is the profit factor. The ratio is defined as the sum of all transactions with a profit divided by the sum of all transactions closed with a loss. A profit factor above 1.50 is considered good enough, and above 2.0 is considered ideal.
The Profit Factor for Senti-Bot was 1.37 at the end of 2024. We can interpret this to mean that for every transaction the bot gained 37% more on average than it lost.
Sharpe ratio
In order to assess the ratio of the return achieved to the risk taken, we track two main indicators. The first is the Sharpe ratio, which measures risk-adjusted return (measured by average deviation). The higher the values of this indicator, the better the investment is considered. Investments for which the Sharpe Ratio is greater than 3.0 are considered among the best.
For Senti-Bot, the Sharpe ratio at the end of 2024 was 3.92, which means that it was much higher than for most mutual funds. This is significant because a higher Sharpe ratio means almost 4 times higher returns relative to risk, which confirms the attractiveness of the strategy made available to you.
Calmar indicator
Calmar Ratio is the second main indicator of investment performance, which determines the ratio of the rate of return (calculated on an average annual basis) in relation to the maximum slippage. In general, the higher its value, the better. This is because it means by how many times the average annual cumulative rate of return exceeds the past slide. Values above 1 mean that the rate of return, was higher than the landslide.
At the end of 2024, Senti-Bot’s Calmar index was 5.14. Thanks to high profits, the bot has provided you with a result of more than 5 times its maximum drop in value.
Table – summary summary
Thank you for your trust and support of Senti-Bot’s development! We are enthusiastic about 2025 and the progress we want to make for you. We encourage you to follow our results – we believe that the best is yet to come!
SentiStocks team