Comparative Analysis of Moving Average and Bollinger Bands as an Investment Strategy in a Select Crypto Asset

Enagbare O. Precious and Nyankomo Marwa ()
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Enagbare O. Precious: University of Stellenbosch Business School
Nyankomo Marwa: University of Johannesburg Business School

A chapter in Towards Digitally Transforming Accounting and Business Processes, 2024, pp 53-70 from Springer

Abstract: Abstract Investment in the crypto space requires careful consideration to ensure favourable returns. It, therefore, becomes imperative to employ an appropriate investment strategy that can accurately forecast the volatility of crypto assets to gain absolute returns on investment. This study investigates the efficiency of technical and analytical tools, Moving Average Envelop (MAE) and Bollinger Bands (BB), alongside the buy and hold trading strategy as the investment strategy on 718 daily data points of Nexo. Nexo is an automated centralized finance system, the next generation fintech model for modern microfinance service provision with crypto assets as collateral for instant loans. The result shows that MAE (10%) outperformed MAE (5% and 3%), BB and the buy-and-hold trading strategy. The crypto asset volatility examined (Nexo) could lead us to expect BB to outperform MAE, but this was not the case. This paper concludes that the MAE should be used over BB and the buy-and-hold trade strategy, especially where there is a clear trend and at higher percentages of the MAE. Hence based on the sample data MAE (10%) is recommended strategy for optimal returns.

Keywords: Bitcoin; Blockchain; Bollinger bands; Crypto assets; Dapps; Moving average envelope; Nexo; Technical analysis (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-031-46177-4_4

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DOI: 10.1007/978-3-031-46177-4_4

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