Bitcoin Trend Strategy Returned 25% a Year in Recent Five-Year Comparison

Bitcoin (BTC) strategies that shifted between the asset and cash outpaced holding in a recent five-year comparison, posting a 25% average annual return against 8%. The results contrast with the S&P 500, where buy-and-hold led trend following in a separate 10-year backtest.

In a 10-year Bitcoin test, the trend strategy averaged 68.4% per year, compared with 62.8% for holding BTC. The strategy held Bitcoin during bullish periods and moved to cash during bearish ones. A version that combined trend following with long and short positions averaged 40.8% per year.

The S&P 500 buy-and-hold approach returned 392% cumulatively over its 10-year backtest, while trend following returned 166%. Their average annual returns were 16.1% and 9.6%, respectively.

The approaches also differed in how they handled exposure. The S&P 500 periodically removes weaker constituents and adds companies that meet its criteria, while the Bitcoin trend strategy moved to cash in bearish periods.