Is Leveraged Bitcoin DCA More Profitable than Spot?
Original Title: "Is DCA Leveraged in BTC Really More Profitable?"
Original Author: CryptoPunk
Five-Year Backtest Tells You: 3x Leverage Has Almost No Cost-Effectiveness
Conclusion Upfront:
In a backtest over the past five years, the final return of BTC's three times leveraged DCA was only 3.5% higher than two times leverage, but it incurred a risk cost close to zero.
From the perspective of risk, return, and feasibility — spot DCA is actually the optimal long-term solution; 2x is the limit; 3x is not worthwhile.
Part One|Five-Year DCA Net Worth Curve: 3x Did Not "Pull Ahead"


The net worth trend can be easily seen:
· Spot (1x): A smooth upwards curve with manageable drawdowns
· 2x Leverage: Significantly amplifies returns during a bull market
· 3x Leverage: Experiences multiple "ground-level crawls," being consumed by long-term oscillations
Although in the rebound of 2025-2026, 3x slightly outperformed 2x in the end,
but over several years, the net worth of 3x consistently lagged behind 2x.
Note: In this backtest, the leverage part was backtested using daily rebalancing, resulting in volatility drag.
This means:
The final victory of 3x heavily depends on the "last segment of the market."
Part Two|Final Return Comparison: Leverage's Marginal Returns Quickly Diminish

The key is not "who benefits the most," but by how much extra:
· 1x → 2x: Extra earnings ≈ $23,700
· 2x → 3x: Only extra earnings ≈ $2,300
Earnings almost no longer increase, but the risk increases exponentially.
Three | Maximum Drawdown: 3x is close to "structural failure"


There is a very crucial reality here:
· -50%: Psychologically tolerable
· -86%: Requires +614% to break even
· -96%: Requires +2400% to break even
With 3x leverage in the 2022 bear market, it has essentially reached "mathematical bankruptcy,"
Subsequent profits come almost entirely from new capital inflows after the bear market bottom.
Four | Risk-Adjusted Return: Spot Trading is Optimal


This set of data illustrates three things:
1. Spot trading offers the highest risk-adjusted return
2. The higher the leverage, the worse the downside risk "risk-to-reward ratio"
3. 3x remains in a deep drawdown area for an extended period, causing tremendous psychological pressure
Ulcer Index = 0.51, what does this mean?
Your account is "underwater" for a long time, providing almost no positive feedback.
Why does 3x leverage perform so poorly in the long term?
The reason in just one sentence:
“Daily Rebalancing + High Volatility = Continuous Decay”
In a ranging market:
· Upward Movement → Increase Position
· Downward Movement → Decrease Position
· No Clear Trend → Account Keeps Shrinking
This is the typical Volatility Drag.
And its destructive power is directly proportional to the square of the leverage ratio.
For high-volatility assets like BTC,
3x leverage results in a 9x volatility penalty.
Final Conclusion: BTC Itself is Already a “High-Risk Asset”
The answer from this five-year backtest is very clear:
· Spot Investment: Optimal risk-return ratio, suitable for long-term execution
· 2x Leverage: Aggressive upper limit, only suitable for a few individuals
· 3x Leverage: Very low long-term cost-effectiveness, not suitable as an investment tool
If you believe in the long-term value of BTC,
then the most rational choice is often not to “add another layer of leverage,”
but to let time be on your side, not against you.
You may also like

Russia’s Largest Bitcoin Miner BitRiver Faces Bankruptcy Crisis – What Went Wrong?
Key Takeaways BitRiver, the largest Bitcoin mining operator in Russia, faces a bankruptcy crisis due to unresolved debts…

Polymarket Predicts Over 70% Chance Bitcoin Will Drop Below $65K
Key Takeaways Polymarket bettors forecast a 71% chance for Bitcoin to fall below $65,000 by 2026. Strong bearish…

BitMine Reports 4.285M ETH Holdings, Expands Staked Position With Massive Reward Outlook
Key Takeaways BitMine Immersion Technologies holds 4,285,125 ETH, which is approximately 3.55% of Ethereum’s total supply. The company…

US Liquidity Crisis Sparked $250B Crash, Not a ‘Broken’ Crypto Market: Analyst
Key Takeaways: A massive $250 billion crash shook the cryptocurrency markets, attributed largely to liquidity issues in the…

Vitalik Advocates for Anonymous Voting in Ethereum’s Governance — A Solution to Attacks?
Key Takeaways Vitalik Buterin proposes a two-layer governance framework utilizing anonymous voting to address collusion and capture attacks,…

South Korea Utilizes AI to Pursue Unfair Crypto Trading: Offenders Face Severe Penalties
Key Takeaways South Korea is intensifying its use of AI to crack down on unfair cryptocurrency trading practices.…

Average Bitcoin ETF Investor Turns Underwater After Major Outflows
Key Takeaways: U.S. spot Bitcoin ETFs hold approximately $113 billion in assets, equivalent to around 1.28 million BTC.…

Japan’s Biggest Wealth Manager Adjusts Crypto Strategy After Q3 Setbacks
Key Takeaways Nomura Holdings, Japan’s leading wealth management firm, scales back its crypto involvement following significant third-quarter losses.…

CFTC Regulatory Shift Could Unlock New Opportunities for Coinbase Prediction Markets
Key Takeaways: The U.S. Commodity Futures Trading Commission (CFTC) is focusing on clearer regulations for crypto-linked prediction markets,…

Hong Kong Set to Approve First Stablecoin Licenses in March — Who’s In?
Key Takeaways Hong Kong’s financial regulator, the Hong Kong Monetary Authority (HKMA), is on the verge of approving…

BitRiver Founder and CEO Igor Runets Detained Over Tax Evasion Charges
Key Takeaways: Russian authorities have detained Igor Runets, CEO of BitRiver, on allegations of tax evasion. Runets is…

Crypto Investment Products Struggle with $1.7B Outflows Amid Market Turmoil
Key Takeaways: The recent $1.7 billion outflow in the crypto investment sector represents a second consecutive week of…

Why Is Crypto Down Today? – February 2, 2026
Key Takeaways: The crypto market has seen a downturn today, with a significant decrease of 2.9% in the…

Nevada Court Temporarily Bars Polymarket From Offering Contracts in the State
Key Takeaways A Nevada state court has temporarily restrained Polymarket from offering event contracts in the state, citing…

Bitcoin Falls Below $80K As Warsh Named Fed Chair, Triggers $2.5B Liquidation
Key Takeaways Bitcoin’s price tumbled below the crucial $80,000 mark following the announcement of Kevin Warsh as the…

Strategy’s Bitcoin Holdings Face $900M in Losses as BTC Slips Below $76K
Key Takeaways Strategy Inc., led by Michael Saylor, faces over $900 million in unrealized losses as Bitcoin price…

Trump-Linked Crypto Company Secures $500M UAE Investment, Sparking Conflict Concerns
Key Takeaways A Trump-affiliated crypto company, World Liberty Financial, has garnered $500 million from UAE investors, igniting conflict…

Billionaire Michael Saylor’s Strategy Buys $75M of More Bitcoin – Bullish Signal?
Key Takeaways Michael Saylor’s firm, Strategy, has significantly increased its Bitcoin holdings by acquiring an additional 855 BTC…
Russia’s Largest Bitcoin Miner BitRiver Faces Bankruptcy Crisis – What Went Wrong?
Key Takeaways BitRiver, the largest Bitcoin mining operator in Russia, faces a bankruptcy crisis due to unresolved debts…
Polymarket Predicts Over 70% Chance Bitcoin Will Drop Below $65K
Key Takeaways Polymarket bettors forecast a 71% chance for Bitcoin to fall below $65,000 by 2026. Strong bearish…
BitMine Reports 4.285M ETH Holdings, Expands Staked Position With Massive Reward Outlook
Key Takeaways BitMine Immersion Technologies holds 4,285,125 ETH, which is approximately 3.55% of Ethereum’s total supply. The company…
US Liquidity Crisis Sparked $250B Crash, Not a ‘Broken’ Crypto Market: Analyst
Key Takeaways: A massive $250 billion crash shook the cryptocurrency markets, attributed largely to liquidity issues in the…
Vitalik Advocates for Anonymous Voting in Ethereum’s Governance — A Solution to Attacks?
Key Takeaways Vitalik Buterin proposes a two-layer governance framework utilizing anonymous voting to address collusion and capture attacks,…
South Korea Utilizes AI to Pursue Unfair Crypto Trading: Offenders Face Severe Penalties
Key Takeaways South Korea is intensifying its use of AI to crack down on unfair cryptocurrency trading practices.…