The month my rules started saving euros

Half the market says the bull run has started. The other half says we need one last drop first. I don’t know which half is right, so I looked at a question I can answer: how much of what my strategies hold is in euros, and where did those euros come from?

Every Aurono strategy keeps two things: coins and euros. The euros are dry powder. When a dip-buy rule fires, the euros pay for the coins. When a sell rule fires, the euros come back. Add up all my strategies and you get one ratio: the share of the whole account that sits in euros instead of crypto.

The ratio roughly doubled

When I started in April, about 10% of the account was in euros and 90% in crypto. That lopsided start makes sense: most of my strategies started with coins I already owned, bought long before I had any rules.

At the end of September the share in euros was 19.5%. Roughly double.

That sounds like a clean story about rules building a cash buffer. The cash share chart doesn’t support that story, though. The highest point wasn’t in September. The highest point was 22.5%, on 23 May. And the line jumps around: 9.5% in mid-June, almost 20% a week later.

Those jumps weren’t the rules. Those jumps were me.

In the bear, I was the source of the euros

Between mid-May and early July, Bitcoin fell from about €68,000 to about €53,000, more than 20%. My dip-buy rules did what they were set up to do: buy as prices fell. In June, the rules spent about six euros on buys for every euro that sells brought back. In July, ten to one.

Those euros had to come from somewhere. They came from me. In that stretch I topped up a batch of strategies more than once, with the biggest rounds on 22 May and in the last week of June. Every top-up lifted the cash share overnight. Then the rules spent the top-up on the next dips, and the cash share drifted back down.

I split the change in the cash share over that bear stretch into its parts. My top-ups pushed the share up by about 48 percentage points. The rules’ net buying pulled the share down by about 47 points. The two almost cancelled out. The rules spent nearly every euro I added.

That isn’t a complaint. Buying while prices fall is the point of a dip-buy rule. But the result is that, through the bear market, the dry powder in my account wasn’t really a treasury. The dry powder was a pass-through: euros came in from my bank account and went straight out into coins.

September flipped the direction

From July, Bitcoin climbed back, to about €73,000 at the end of September. In August the rules still spent more than they raised: about two euros out for every euro in.

September was the first month since I started running Aurono in April where the rules sold more than they bought. Sell proceeds came to about €1.45 for every euro spent on buys.

The decomposition for September shows the turn clearly. Rising prices pushed the cash share down by about 4 percentage points, because coins that go up make the crypto side of the account heavier. My own top-ups added about 2 points. The rules’ net selling added more than 5. The rules outran the price for the first time.

The change also shows up per strategy. On 1 May, 2 of my 36 strategies held more than half their value in euros. At the end of September, 9 of 44 did, and 3 were completely in euros: sold out and waiting for the next dip.

What the euros are for

Dry powder doesn’t sit in one pile in my account. The euros sit in 44 small piles, one per strategy, and each pile only pays for that strategy’s own dip buys. A local dip in one coin gets bought with euros that coin earned on the way up. I don’t have to decide where the money goes, and I don’t have to send new money in.

That’s the real difference from the bear market. In June, every dip-buy needed euros I had to bring. Now a growing share of dip-buys can be paid from earlier sells.

Enough for the next bear?

Not yet, and I want to be honest about that. One month of net selling is a turn, not a trend. And that’s fine. If this is the start of the bull market, there’s still plenty of time for the sells to top up the euros.

Here’s the comparison I find most useful: the euros in my strategies today would cover about 1.3 times what the rules spent on buys in June, the heaviest buying month so far. Measured against the whole slide from mid-May to early July, today’s euros would cover about 90% of it. So if the next drop looks like the last one, the rules could pay for most of the buying themselves, and I would only need to top up near the end.

Whether that drop comes next month or after a long bull market, I don’t know. I don’t need to know. If the bull market has really started, that is exactly the time in which the sell rules top up the euros. The longer the rise lasts, the less the next bear depends on my bank account. If the last drop still comes, the rules will meet that drop with more of their own euros than they had in May.

→ Profit isn’t profit until you take it · Try a strategy in the Lab with shadow mode