OVERVIEW
Shrimpy wanted to build the most robust portfolio management backtest tool for cryptocurrency institutions. A service in which imprecise data leads to incorrect decisions and a loss of money. The company expanded its backtesting infrastructure by integrating the CoinAPI data APIs. This increased the backtesting precision, dataset completeness, and exchange coverage that could be provided by the Shrimpy backtesting tools.
CUSTOMER
Shrimpy is an application used by cryptocurrency traders looking to automate their trading and portfolio strategies. With Shrimpy, traders can manage their exchange accounts, create crypto indexes, and automate their strategy from a single unified dashboard.
CHALLENGE
Institutional grade backtesting tools must analyze precise historical data on an exchange specific manner in order to provide accurate historical performance values. The data must contain both the best bid and ask rates, the amount of each asset available at the bid and ask price, as well as the next best bid and ask prices on each side to account for slippage. Collection of the data must be frequent, to allow for selection of trade events that would be as similar to our actual algorithm implementation as possible.
Despite the level of care that needs to be taken when developing a backtesting tool, many trading applications still use OHLCV data (Open-High-Low-Close-Volume) to construct their backtests. This results in unpredictable performance measurements, as the backtests fail to account for the bid / ask spread, slippage, trade timing, and exchange specific behaviors. Incorrect backtest results can cause institutions to make poor decisions that ultimately lead to the loss of capital.
For these reasons, Shrimpy wanted to integrate high-fidelity exchange data which would allow the backtesting tools to match the real-world behaviors of their trading engine. By providing this precise data, Shrimpy would be able to give institutions the level of accuracy they required. Institutions could then confidently use the backtesting results and execute on strategies that could potentially boost long-term returns.
SOLUTION
Shrimpy wanted to build a robust backtesting tool that was as accurate to the real-world results of executing strategies on their trading platform as possible. The company searched for a data provider with extensive exchange and order book data that allowed for a flexible data acquisition approach. To accomplish this goal, Shrimpy turned to CoinAPI.
Building on CoinAPI’s industry-leading data platform, Shrimpy was able to collect exchange-specific order book data through the Rest APIs. The flexible data acquisition options provided convenient ways to compile data from relevant exchanges, the trading pairs that were required, and custom time frames.
By using CoinAPI, Shrimpy launched the most accurate free backtesting tool for cryptocurrency portfolio management in the industry. The Shrimpy backtest tool provides a significant increase in both precision and accuracy over other tools. The company is also able to offer coverage over all of their supported exchanges, a longer history of data on each exchange, and additional market depth in their backtests.
RESULTS
The Shrimpy team was able to drastically improve the precision and accuracy of their backtest tool by taking advantage of the CoinAPI Rest APIs. With this new tool in hand, the Shrimpy team was able to conduct extensive research and collect advanced insights regarding crypto portfolio rebalancing. These insights validated their hypothesis about the long-term benefits of rebalancing a diversified portfolio, improved product awareness, and ultimately resulted in increased revenue due to the subsequent integration of a paid backtesting tool into the core application.
Highly accurate exchange data maximized the impact of the backtesting tool and improved their reach into the institutional crypto market. As a result of the easy integration and quick turnaround time, a service that could have taken weeks or months to implement took only a few days to get up and running. Time is of critical importance for any startup, and CoinAPI provided an avenue to implement a robust solution, without sacrificing time.