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In today’s newsletter, Markus Thielen from 10x Research explains why a cycle-smart strategy outperforms traditional Dollar-Cost Averaging for bitcoin.
Then, in “Ask an Expert,” Eric Tomaszewski from Verde Capital Management, shares why advisors should look past surface-level numbers to find where real value is actually growing.
If you have two minutes, TrackInsight is benchmarking how advisors are incorporating crypto ETFs into client portfolios. Take this 2-minute survey and get early access to the results.
Crypto ETFs: Why bitcoin investors should trade the cycle, not dollar-cost average
The same playbook that works for the S&P 500 is destroying capital in bitcoin. Understanding why changes how you allocate.
Dollar-cost averaging (DCA) is one of the most sensible strategies in traditional finance. Spread purchases over time, smooth out volatility and avoid the psychological trap of market timing. For equities and bonds, assets that consistently appreciate, it is close to optimal for most retail investors.
However, applying DCA to bitcoin is one of the most common and costly mistakes I see advisors make on clients' behalf.
Bitcoin has completed four full market cycles since 2011. Each followed roughly the same pattern: a halving event reduces the supply of new coins, adoption demand accelerates, price appreciates dramatically, leverage builds in the system, then the cycle reverses with drawdowns that have historically exceeded 70%.
The peak-to-trough drawdown for a buy-and-hold bitcoin investor across the full history is −80%. That is not a tail-risk scenario — It happened three times. The typical outcome: capitulation near the bottom, followed by missing the recovery. The long-run return looks extraordinary on a chart.
DCA smooths the path only marginally. An investor who bought steadily through the 2021–2022 cycle still experienced catastrophic mark-to-market losses during the bear phase. The strategy offers psychological comfort, not mathematical protection, because it does not reduce exposure when the regime has structurally turned negative.
The alternative to DCA is regime awareness. Bitcoin spends extended periods, typically 12 to 18 months, in identifiable bull or bear regimes, either compounding at an extraordinary rate or losing most of those gains. The key insight is that these regimes are not random. They are detectable in advance using observable data across both price behavior and the on-chain economics of the Bitcoin network.
In our research, we track ten independent signals, spanning momentum, trend and on-chain cost-basis metrics, that collectively identify the regime. The finding is straightforward: when most signals are positive, bitcoin's average monthly return has been +25%. When the majority are negative, the average is 6%[CP1], a 31-percentage-point spread.
A cycle-aware long-only approach has produced a Sharpe ratio of 1.22 in backtesting versus 0.82 for buy-and-hold over the same 15-year period. More importantly, it cut the maximum drawdown from −80% to −44%. For a client with an investment policy statement or a fiduciary mandate, that difference is what passes a risk committee.
The implication for wealth managers is that bitcoin deserves a place in a diversified portfolio; the long-term return premium is real, and the diversification benefit is measurable. But the allocation framework should reflect what bitcoin is.
Bitcoin is a cyclical asset driven by a four-year supply schedule, successive waves of institutional adoption and leverage cycles that amplify both upside and downside. Concretely, advisors should consider building a dynamic allocation band rather than a fixed position. The mandate might specify a maximum 5% bitcoin allocation. The question is whether that 5% is deployed at 100%, 50%, or 0% at any given point in the cycle. Rules-based regime signals, whether proprietary or third-party, can provide the framework for those allocation decisions without requiring discretionary market calls.
The win rate of a cycle-aware approach is lower than buy-and-hold, winning not by being right more often, but by avoiding the months when bitcoin loses 20%, 30%, or 40%. Those months cluster, and stepping aside during them is not timing the market; it is about reading the cyclical structure of the asset.
We have made three public, timestamped market calls since 2022: the October 2022 cycle bottom, the July 2023 projection of a $125,000 target and the October 2025 bear signal, each grounded in the same signal framework. The methodology is not infallible. But it is systematic, auditable and structurally better suited to bitcoin's cyclical nature than the passive approach most advisors currently deploy.
Bitcoin rewards those who understand its cycle. Advisors who treat it like any other asset are leaving risk-adjusted returns on the table and exposing clients to drawdowns that, in practice, end portfolios rather than weather them.
- Markus Thielen, CEO, 10x Research
Ask an Expert
If blockchain technology succeeds, are investors owning the right things?
For years, investors assumed that if a blockchain ecosystem grew, its native token would naturally appreciate. Increasingly, I’m not convinced that’s always true. Technology can become indispensable while value accrues elsewhere to sequencers, applications, stablecoin issuers or liquidity layers.
As fiduciaries, the opportunity may not simply be identifying what gets used but understanding where the economics ultimately settle and whether traditional valuation frameworks need to evolve alongside the technology.
What if the market is dramatically underestimating Ethereum's role?
The market seems fixated on whether Layer 2s are siphoning away fees and users from Ethereum. Yet reserve assets have never derived their value from how frequently they're spent. They derive it from being held, trusted and used as collateral.
If ETH evolves into productive collateral for institutions, autonomous organizations, and eventually AI agents, we may look back and realize we were debating gas fees while missing the emergence of a digital reserve asset.
The world's reserve currencies weren't built through spending. They were built through savings and trust.
What if the biggest opportunity isn't AI or crypto but their intersection?
The Industrial Revolution paired machines with energy. The internet paired humans with information. The next era may pair autonomous intelligence and agents with programmable finance.
If AI becomes capable of economic activity and blockchain provides the trust and settlement layer beneath it, investors may need to rethink what constitutes infrastructure.
While the timing and extent of that convergence remain uncertain, some of the most transformative opportunities often emerge where major technological shifts overlap.
What if crypto's greatest inefficiency is that investors are still measuring activity when they should be measuring ownership and value capture?
For years, the industry has celebrated metrics like Total Value Locked (TVL), yet TVL often says more about assets sitting in a protocol than the economics flowing back to its owners.
Protocols like Hyperliquid have challenged the traditional playbook by prioritizing revenue distribution and alignment with token holders, while Aerodrome's evolution toward predictive, continuous allocation suggests that capital itself is becoming programmable and dynamically optimized.
As crypto matures, the biggest opportunities may emerge not from identifying the protocols with the most activity, but those that most effectively capture, allocate and return real economic value to the people who own them.
- Eric Tomaszewski, financial advisor, Verde Capital Management
Watch of the Week
CoinDesk Data and Indices President Dave LaValle sat down with The Wealth Advisor about Wall Street's accelerating push into bitcoin ETFs.
- He spoke about The Morgan Stanley's Bitcoin Trust ETF, which launched in early April and crossed $230 million in assets within a month, the first spot bitcoin ETF from a major U.S. bank.
- He also pushed back on the idea of crypto as a separate asset class: "It's not the crypto market or the TradFi market. It's the market."
- Watch the full video at The Wealth Advisor.
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