Bitcoin trend-following strategies outperformed simple buy-and-hold over the past decade in the backtests presented, while the opposite held true for the S&P 500. The results suggest that a rules-based approach designed to remain exposed during sustained advances and move to cash during declines would have captured Bitcoin’s long rallies while avoiding part of its sharper drawdowns.
The 10-year Bitcoin test put annualized returns from a trend-following model at 68.4%, compared with 62.8% for buy-and-hold. The advantage became more pronounced in the most recent five-year period: the trend model returned 25% annually, while holding Bitcoin continuously produced an 8% annual return.
A separate Bitcoin strategy that used the same trend framework but could take both long and short positions generated a 40.8% annualized return over 10 years, according to the report. That result indicates that the most aggressive version of the model did not necessarily outperform the long-or-cash strategy over the full period, despite having the ability to profit from falling markets.
Bitcoin’s volatility favors an exit rule
The trend-only framework described in the analysis stays invested when Bitcoin is in an identified uptrend and shifts capital into cash when conditions turn negative. It does not require a trader to predict an exact market top or bottom. Instead, it accepts that reversals will be recognized only after they begin, in exchange for reducing exposure during prolonged declines.
That trade-off appears better suited to Bitcoin than to U.S. large-cap equities. Bitcoin has delivered extraordinary long-term gains, but its price history includes repeated bear markets severe enough to weigh heavily on returns for anyone who entered near cycle highs. A strategy that sidesteps even part of those periods can improve compounded results, although it may also miss rapid rebounds when signals are slow to reverse.
The report’s five-year figures are especially relevant because they cover a period that included Bitcoin’s 2021 peak, the 2022 crypto-market collapse, the recovery that began in late 2023, and subsequent volatility. Buy-and-hold returns were still positive in that window, but substantially lower than those generated by the trend model.
The results should not be read as a guarantee that a trend system will continue to outperform. Backtests depend on their rules, the timing of entries and exits, assumptions about execution, and whether transaction costs are included. Trend-following methods can also suffer during choppy markets, where repeated reversals trigger exits and re-entries without a sustained move developing.
Equities rewarded staying invested
The S&P 500 results produced a sharply different conclusion. Buy-and-hold returned 392% in total over 10 years, or 16.1% annualized, compared with a 166% total return and a 9.6% annualized gain from the trend-only approach.
Those figures reflect a decade in which U.S. equities recovered from several selloffs but maintained a strong long-term upward path. A trend system may have reduced downside exposure during periods of stress, yet it also appears to have spent enough time outside the market to miss gains during recoveries.
Seasonal data included in the report reinforced the equity-market tilt toward holding exposure through particular parts of the year. The S&P 500 posted average gains of 7.2% between Nov. 1 and April 30, compared with average returns of 2.9% from April 30 to Nov. 1. The index rose in 76% of the November-to-April periods covered by the data.
That seasonal pattern is not a trading rule by itself, but it provides context for why systems that frequently move out of an equity index may struggle against passive ownership in a broadly rising market. Bitcoin’s deeper and more prolonged drawdowns create a different set of conditions, making downside filters potentially more valuable.
Macro risks shape the near-term trading environment
The report placed the strategy discussion against a more uncertain macroeconomic backdrop. Several Federal Reserve voters had ruled out an interest-rate increase on Oct. 28, while market expectations had shifted toward the possibility of a December increase. Its base scenario contemplated December as the final increase before a policy pause.
The same outlook argued that the 10-year U.S. Treasury yield may have already peaked and could move back below 5.0%. Falling long-dated yields can ease financial conditions and support risk assets, although the path would depend on inflation, growth and Federal Reserve communications.
Oil’s return to $100 a barrel added another complication. Higher energy prices can feed into inflation expectations and constrain the room available for monetary easing, particularly if crude prices remain elevated for an extended period.
The report also flagged the U.S. midterm election scheduled for Nov. 3 as a source of political uncertainty. Prediction markets were described as assigning roughly a 65% probability to a Democratic sweep. The analysis linked that scenario to concerns over the pace of AI data-center construction, arguing that policy and financing conditions could affect companies exposed to the infrastructure buildout.
Geopolitical risk was also included, with possible further U.S. and Israeli strikes on Iran identified as a potential market stress point. Such events could affect energy markets, global risk appetite and demand for liquid safe-haven assets.
Lower volatility changes the risk calculation
Bitcoin’s 30-day volatility had fallen to 39% in late October 2026, according to the report. Lower volatility can make a market appear calmer, but it also reduces the likelihood that broad upward price surges will quickly offset poorly timed entries.
The report said several short-term algorithmic models had turned heavily bearish. In that environment, trend-following advocates would favor reducing leverage and maintaining cash reserves until signals show that an uptrend has resumed.
It also cited average daily spot volume of $1.63 billion, the lowest level since late 2023. Lower spot activity can leave markets more sensitive to abrupt moves when large orders arrive, while also making breakouts less convincing without follow-through.
For Bitcoin traders, the comparison with the S&P 500 points toward a practical distinction: passive holding has historically been highly effective for a steadily rising equity index, while Bitcoin’s larger swings have given systematic exit rules more opportunity to improve risk-adjusted positioning.
Want deeper strategy insights? Explore our guide on technical analysis in stocks vs crypto to refine your trend-following and buy-and-hold decisions.
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