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Comparing Buy&Hold Returns With 7 Trend-Following Strategies on 25 Coins Over 3.5 Years of Data

Is Buy and Hold Really the Best Strategy in Crypto?

There are a lot of these proverbs that get thrown around the trading community like “cut your losses short, let your winners run”, “buy the dip”, “never add to a losing trade”, “don’t try to catch a falling knife” etc. Yes, intuitively they sound about right, but how much truth there really is behind them?

I don’t like such general statements without proof. Especially when money is on the line. I need statistical validation. Today I’m going to show you, that holding might not be the best option if you put in a little bit of work.

I’ll try to attack/test one of my least favorite assumptions — “Buy and Hold is the best strategy”. To do that, I’ll compare Buy and Hold (B&H from now on) returns for 25 coins with several basic strategies in different time periods:

Jan 2017 — Jul 2020 Jan 2018— Jul 2020 Jan 2019 — Jul 2020

Just so we don’t compare apples to oranges, I won’t be using any advanced strategies. I will compare B&H to simple, basic, well-known trend following strategies that require a few minutes/hours to code.

To make this comparison as fair as I possibly can, I fill analyze results in groups based on different date ranges and therefor — different market regimes. As you will see, the difficulty to beat B&H depends heavily on the market regime in that time period. It’s very difficult to beat a pure bull market that has diagonal/parabolic trajectory because it offers very few pullbacks to give any chance to beat B&H by a reasonable margin.

Coins used

I will use 25 of the ~TOP50 coins. Since we need coins with at least a few years of history, we can’t use most of the hot new DeFi coins like COMP, LEND, SNX, KNC, etc.

I will use 3 different date ranges. Specific coins for each date range depend on data availability. Some will use partial range data (starting later), specified in parentheses.

Coins used: XBT, ETH, XRP (since May 18, 201...

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