James Stanley

Google Trends portfolio: buying Monero

Thu 31 August 2017

Just a quick update on the Google Trends portfolio.

CoinGoogle Trends scoreScore relative to BitcoinMarket capMarket cap relative to BitcoinMarket cap over-valued factor
Bitcoin55 (-25)1.00$76,000,000,000 (+$4.3 B)1.001.00
Ethereum13 (-2)0.24 (+0.04)$35,700,000,000 (+$3.7 B)0.47 (+0.02)1.99 (-0.24)
Bitcoin Cash2 (-6)0.036 (-0.074)$9,950,000,000 (-$250 M)0.13 (-0.01)3.47 (+2.13)
Ripple10 (-4)0.18 (-0.01)$8,730,000,000 (+$910 M)0.11 (+0)0.63 (+0.05)
Litecoin6 (+2)0.11 (+0.057)$3,380,000,000 (+$80 M)0.044 (-0.002)0.41 (-0.45)
Dash5 (+0)0.091 (+0.024)$2,790,000,000 (+$60 M)0.037 (-0.001)0.40 (-0.17)
IOTA3 (-1)0.055 (+0.002)$2,470,000,000 (-$80 M)0.033 (-0.003)0.60 (-0.07)
Monero4 (+2)0.072 (+0.045)$2,100,000,000 (+$130 M)0.028 (+0.001)0.38 (-0.64)
Dogecoin1 (+0)0.018 (+0.005)$231,000,000 (+$35 M)0.0030 (+0.0003)0.17 (-0.03)

The major changes here are Bitcoin Cash's Trends score dropping by about 75% and Monero's score doubling. This now places Monero's "market cap over-valued factor" at substantially less than 1.00. Monero's Google Trends score actually went up on Tuesday night, but I put off buying any because I wondered if it would quickly go down again.

The Google Trends scores seem highly volatile. On Sunday Bitcoin scored 75, on Tuesday night it scored 83, and now on Thursday morning it scores 55. This volatility could be a confounding variable in the performance of the portfolio.

Along similar lines, I realised Dogecoin perhaps shouldn't have been in the portfolio. I plugged the Google Trends score of 1 into the formula and got out a "market cap over-valued factor", but I have no way of knowing if the score of 1 is "just slightly more than 0, but enough to display as 1" or "almost enough to display as 2". If the score were 0 I wouldn't have bought it and I have no way to know how much more than 0 it needs to be before it is displayed as 1. For that matter, I don't even know if the Google Trends score is linear in the number of searches. It could be a log scale for all I know, in which case my formula will over-value the less popular cryptocurrencies.

On Sunday I said that the Bitcoin market cap might be over-valued by 6% or under-valued by 28% based on some dubious calculation. I went on to say that's close enough that I'm not going to worry about it, and people asked why 28% is close enough not to worry about. The answer is because it's 28% under-valued. Since I'm looking for things that are under-valued by comparing them to Bitcoin, I will still pick things that are under-valued even if Bitcoin is under-valued. If the calculation said Bitcoin might be over-valued by 28% then that would be more of a problem.

There was no cryptocurrency in the portfolio that is an obvious candidate to want to sell, so I just sold 1/6th of each of them in order to buy the Monero.

CoinQuantityValue
Ripple410$93.14
Litecoin1.31$84.14
Dash0.22$81.27
IOTA88.8 M$78.24
Dogecoin44,800$93.86
Monero0.65$90.51
Total-$521.14 (+4.2%)

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