Glassnode
A backtested $BTC strategy buys when the 30-day RSI of entities in profit crosses above its threshold. Since July 2023, its worst drawdown was 20%, compared with 53% for holding Bitcoin through the same period.
The comparison points to a risk-management benefit rather than a guarantee of superior returns. A lower peak-to-trough loss can make a Bitcoin allocation easier to hold through volatility, but the result depends on the tested period, transaction costs and the precise rules used.
Why it matters
Bitcoin’s large drawdowns are central to portfolio construction because investors must decide whether to stay invested, reduce exposure or rely on timing signals. A strategy that materially lowers the worst loss could improve the risk profile of systematic or rules-based allocations.
The signal also illustrates how momentum indicators can be combined with trend filters. The RSI trigger alone does not establish a complete strategy, so the entities-in-profit condition appears designed to avoid buying into a broader downturn.
Market impact
The 33 percentage-point gap between the strategy’s 20% worst drawdown and Bitcoin’s 53% is the headline result. It does not establish how often the strategy traded, whether it produced positive net returns or how it performs outside the tested period.
For investors, the practical question is whether reduced downside justifies added complexity and execution risk. The result is strongest as evidence that disciplined filters may help control Bitcoin exposure, not as proof that one RSI threshold can reliably predict price.
Frequently asked questions
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What trigger does the backtested Bitcoin strategy use?
It buys when the 30-day RSI of entities in profit crosses above its threshold, with that condition serving as an additional trend filter.
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How did the strategy’s worst drawdown compare with holding Bitcoin?
Its worst drawdown was 20% since July 2023, compared with 53% for holding Bitcoin over the same period.
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Does a lower drawdown prove the strategy earns higher returns?
No. The result demonstrates reduced downside in the tested period, but it does not establish net returns, profitability or performance outside that sample.
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What does the entities-in-profit condition contribute?
It acts as a trend filter, helping the RSI trigger avoid entries when the broader set of tracked entities is not in profit.
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What should investors check before using this strategy?
They should test the precise rules, trading frequency, transaction costs, slippage and performance across multiple market regimes.
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