This blog post compares the effectiveness of Comtrax, our platform’s DCA service, with that of Coinbase’s DCA service. We used our Recurrtrax product, which enables clients to DCA on an exchange of their choice. To compare the portfolio performance of investing $5 daily in BTC, we selected Coinbase’s built-in DCA service and Comtrax’s DCA service, where Coinbase is one of the integrated exchanges. We analyzed the provided data, which consists of four datasets, with Coinbase’s portfolio performance serving as the benchmark for comparison.

Backtesting Design

To conduct the simulation, a daily investment amount of $5 to to purchase Bitcoin was used, which is a reasonable investment amount when doing DCA. One big difference between Coinbase and Comtrax was that Coinbase conducts the fee directly from the investment amount, meaning only a part of the capital is being invested, while Comtrax conducts the fee at the end of the year, and the user has to pay it separately. This leads to a difference in portfolio development, as Coinbase’s approach leads to lower asset holdings than Comtrax. To make the two portfolios comparable, the fee on Comtrax was calculated for each year and broken down on a daily basis, and subtracted from the portfolio. The different fee levels on Comtrax based on referrals were also considered.

Coinbase — Parameter:
– DCA Fee Absolute : Coinbase deducts a fee of $0.99 directly from the investment amount.

Comtrax — Parameter:
– Daily Fee: Is only applied to profitable portions of portfolio that exceed a certain threshold, and is calculated based on your profits only.
– Maximum fee: It will not exceed the defined percentage of portfolio’s average value over the course of a year.
– Base Threshold: It is the average monthly deposit over the course of a year, multiplied by 15%. Fee will only be charged if your portfolio is profitable and exceeds the threshold.

Built-In DCA Services on Exchanges

When it comes to using the built-in DCA services on exchanges, there are several limitations to consider. One of the most significant limitations is the frequency of investment. This can be a problem for those who prefer to invest on a more frequent basis.

Binance, for example, does not allow daily investments, which limits investors to weekly or monthly investments.

Another limitation of built-in DCA services on exchanges is the minimal investment amount. This can be problematic for investors who want to start with a small investment and gradually increase their position.

While some exchanges like Coinbase and Gemini allow users to invest as low as $2 and $5, respectively, other exchanges such as Crypto.com require a minimum investment of $10.

In addition, built-in DCA services on exchanges may also come with additional fees. It is important for investors to consider all fees associated with DCA services before choosing an exchange to invest with.

Coinbase, for example, charges a fee of 0.99$ for small amounts like 5$ on daily DCA, which can reduce an investor’s returns.

Results

The performance data provided in Figure 1 showcases the impact of utilizing the Recurrtrax feature of Comtrax for Dollar Cost Averaging (DCA) on the Coinbase exchange. The baseline data for Coinbase serves as the reference point for comparison. The other three datasets illustrate the portfolio performance of utilizing Comtrax’s DCA service with referral programs for different numbers of clients.

The results of the comparison between Comtrax’s portfolio performance and Coinbase’s DCA service showed that portfolio performance on Comtrax improved as more clients were referred to the platform. This is attributed to Comtrax’s lower fees compared to Coinbase’s DCA service. Coinbase’s data was used as the baseline, while the other three datasets demonstrated the performance of Comtrax and its referral program.

Overall, in almost every case, Comtrax’s DCA service outperformed Coinbase’s built-in DCA service, except for the scenario where a client did not have any referrals, which resulted in no fee reduction, and did not outperform during the last few months.

In the dataset Coinbase [Comtrax DCA: Referred 0 Clients], where no clients were referred to the Comtrax platform, the minimum percent point deviation was -23, and the maximum percent point deviation was +227. The negative deviation indicates that the portfolio performed worse than the baseline, while the positive deviation indicates that the portfolio performed better than the baseline. This means that investing through Coinbase’s DCA with their service fee was more profitable in the last few months than using Comtrax’s DCA service without any referrals.

In the dataset Coinbase [Comtrax DCA: Referred 4 Clients], where four clients were referred to the Comtrax platform, the minimum percent point deviation was +6, and the maximum percent point deviation was +243. This indicates that the portfolio performed better than the baseline, with a positive deviation for both minimum and maximum percent points. This shows that Comtrax’s referral program had a positive impact on the portfolio’s performance, leading to higher returns for investors.

Limitations

Although our analysis produced promising results, there are some limitations that need to be acknowledged. First, we did not take into account the impact of exchange fees, such as spreads and trading fees, which can vary between exchanges and significantly affect portfolio performance. However, even if the exchange fees were the same for all datasets in our study since the same exchange was used, it could still have an impact. Regarding Comtrax’s fee policy, the impact shown here would have been smaller since the fee is only applied to profits above the base-threshold. Second, our analysis only focused on BTC, and the results may not be generalizable to other cryptocurrencies. Lastly, our study relied on historical data, and past performance may not accurately predict future results.

Conclusion

We analyzed the performance of Comtrax’s DCA service in comparison to Coinbase’s DCA service. The data showed that utilizing Comtrax’s DCA service with the referral program had a significant impact on portfolio performance compared to the baseline Coinbase DCA strategy. Overall, the research provides valuable insights into the potential benefits of utilizing Comtrax’s DCA service and the importance of considering associated costs before making investment decisions.

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