xDOM Balanced

xDOM Balanced: Bitcoin-Dominance-Based Hedge Strategy (xDOMB)

xDOM Balanced is a proprietary, fully onchain strategy inspired by Binance’s BTCDOM futures but refined for better risk-adjusted returns. The strategy dynamically allocates capital based on the Bitcoin Dominance Index—going long BTC and short a rotating market cap-weighted basket of the top altcoins. Rebalanced monthly, it aims to capture BTC outperformance while systematically hedging downside from altcoin exposure.

Bitcoin continues to attract institutional and sovereign buyers, while altcoins face persistent sell pressure from unlocks, VC exits, and token emissions. This creates an asymmetric setup favoring BTC over the medium to long term.

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Historical Performance

Metric	Value
Period	277 days
ROI	43.70%
Max Drawdown	-9.34%
Sharpe Ratio	2.24
Annualized ROI	61.25%
Valuation Currency	USD

Live Performance

• xDOM steadily outperformed BTC with lower volatility from Sep 2024 to Apr 2025.

• Captures upside during BTC rallies while mitigating altcoin-driven drawdowns.

• Demonstrates resilience during major market shifts with consistent trend strength.

Monthly Performance Breakdown

Month	PnL	Cumulative PnL
Aug 2024	-0.55%	-0.55%
Sep 2024	3.82%	3.25%
Oct 2024	8.77%	12.31%
Nov 2024	9.61%	23.10%
Dec 2024	1.31%	24.71%
Jan 2025	5.01%	30.95%
Feb 2025	-5.03%	24.36%
Mar 2025	1.21%	25.87%
Apr 2025	9.80%	38.20%
May 2025	3.98%	43.70%

Methodology

1. Data Selection

• Coins: Top 11 cryptocurrencies by market cap according to CoinMarketCap.

• Dominance: Relative dominance calculated based on the total market cap of these 11 coins.

2. Position Construction

• BTC Long Position: Allocate capital to long BTC equivalent to its dominance (e.g., 57% dominance = 57% BTC long).

• Altcoin Short Basket: Short the remaining percentage across the top 10 altcoins (ranked 2–11), each weighted by their individual dominance within the top 11 set.

3. Portfolio Rebalancing

• Rebalance Frequency: Monthly, at the start of each month.

• Altcoin Tiering:

  • Top Tier: Altcoins ranked 1–10

  • 2nd Tier: Altcoins ranked 11–15

  • 3rd Tier: All others

• Retention Rule: If a current altcoin in the short basket drops into 2nd Tier, it remains.

• Replacement Rule: If it drops below 15th, it is replaced with a new entrant from the Top Tier.

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Key Features

• Dominance-Based Allocation: Long BTC proportional to its market dominance.

• Altcoin Short Basket: Shorts altcoins ranked 2–11 by market cap, weighted accordingly.

• Monthly Rebalancing: Responds to market structure shifts and altcoin rotation.

• Fully Onchain & Auditable: Positions and performance are transparent.

• Tailored for Risk-Adjusted Returns: Designed to outperform BTC with lower volatility.

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Why This Strategy?

• Outperformance: Delivers better risk adjusted returns than holding BTC.

• Downside Protection: Shorts mitigate altcoin market drawdowns.

• Smart Rotation: Automatically captures market beta shifts (e.g., alt season vs BTC strength).

• Structural Edge: Benefits from institutional BTC demand while hedging against structurally weak altcoin supply dynamics.

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Risks

• Altcoin Turnover: Monthly inclusion/exclusion of assets can add volatility.

• Slippage & Liquidity: Rebalancing relies on liquid markets.

• Smart Contract Risk: Code risks exist despite audits.