Regime-aware signals outperform dollar-cost averaging in backtests, 10x Research CEO argues
Markus Thielen, CEO of 10x Research, contends that applying dollar-cost averaging to bitcoin is fundamentally misaligned with how the asset behaves. The same playbook that works for the S&P 500 is destroying capital in bitcoin, Thielen argues, because bitcoin operates in distinct bull and bear regimes that last 12 to 18 months and produce dramatically different returns.
A buy-and-hold investor in bitcoin has experienced maximum drawdowns of negative 80% across its history, which has occurred three times since 2011. An investor using DCA through the 2021–2022 cycle still experienced catastrophic mark-to-market losses during the bear phase, according to Thielen’s analysis. Bitcoin has completed four full market cycles since 2011, each following a pattern of halving events reducing supply, accelerated adoption demand, dramatic price appreciation, leverage buildup, and subsequent reversals with drawdowns exceeding 70%.
Instead, Thielen proposes regime-aware strategies that track momentum, trend, and on-chain cost-basis metrics to identify bull or bear periods. When most signals are positive, bitcoin produces an average monthly return of positive 25%. When the majority of signals are negative, the average monthly return drops to 6%, creating a 31-percentage-point spread between regimes.
A cycle-aware long-only approach produced a Sharpe ratio of 1.22 versus 0.82 for buy-and-hold over a 15-year backtesting period. The cycle-aware method also reduced maximum drawdown from negative 80% to negative 44%, according to Thielen’s research. 10x Research tracks 10 independent signals to identify regime shifts, though the exact composition of those signals was not specified.
“Bitcoin rewards those who understand its cycle,” Thielen said. “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.”
Thielen made a cycle bottom market call in October 2022 and projected a $125,000 bitcoin target in July 2023. In October 2025, he issued a bear signal market call. Financial advisors are advised to build dynamic allocation bands rather than fixed positions, with rules-based regime signals guiding deployment decisions. An example maximum bitcoin allocation in such a framework might be 5%.
Eric Tomaszewski, a financial advisor at Verde Capital Management, frames the challenge differently: “If blockchain technology succeeds, are investors owning the right things?” This question underscores a broader tension in how traditional finance approaches bitcoin allocation.
Dave LaValle, CoinDesk Data and Indices President, emphasized the convergence of markets: “It’s not the crypto market or the TradFi market. It’s the market.”
The institutional adoption of bitcoin has accelerated. Morgan Stanley’s Bitcoin Trust ETF launched in early April 2026 and crossed $230 million in assets within one month, marking the first spot bitcoin ETF from a major U.S. bank.
