BOLD

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Post is by: NextgenAITrading and the url/text [ ](https://goo.gl/GP6ppk)is: https://nexustrade.io/case-studies/charlie-morris-bitcoin-gold # A $10,000 Bitcoin/gold portfolio finished at $25,008.98 in this backtest. Holding Bitcoin finished at $14,407.72. Both ran from April 1, 2021 through October 6, 2026, with modeled fees included. The bigger difference was the drawdown. Bitcoin fell 76.38% below its previous peak at its worst point. The blend's maximum drawdown was 28.43%. If the goal is to hold Bitcoin for years, I think reducing the damage along the way deserves more attention. How do you keep exposure to its long-term upside while limiting the losses you have to sit through? I'm skeptical of the crypto propaganda that turns concern about the dollar into an argument for going all in. You can worry about the dollar's long-term purchasing power and still care about position size. A thesis about fiat currency doesn't tell you how much of your portfolio should be exposed to a Bitcoin crash. I tested a version of [Charlie Morris's BOLD](https://www.bytetree.com/research/2024/08/bold-and-the-vix-why-bold-beats-the-stockmarket/) idea using spot Bitcoin and GLD as the gold proxy. Each month, the rule looks at the previous 360 days of observed volatility and gives more weight to the less volatile asset. It then rebalances. The Bitcoin allocation ranged between 15.49% and 40.83% during the broad test. |Portfolio|Total return|Maximum drawdown| |:-|:-|:-| |Bitcoin + gold, weighted by inverse volatility|\+150.09%|28.43%| |Monthly 50/50 Bitcoin + gold|\+127.40%|50.14%| |Hold Bitcoin|\+44.08%|76.38%| |Hold GLD|\+134.46%|28.41%| During calendar 2022, the blend lost 14.79%, compared with Bitcoin's 63.25% loss. It also gave up much of Bitcoin's upside during the 2023 and 2024 rallies. Gold alone nearly matched the blend's broad return with slightly less drawdown. In the January 2, 2025 through October 6, 2026 window, gold won: +55.58% versus the blend's +42.72%. Both assets also fell together during the blend's worst drawdown. The allocation reduced the damage across these dates, but it still took a 28.43% hit. Each account started with $10,000. Costs were 0.7% per Bitcoin fill and 0.1% per GLD fill. These are cumulative historical backtest returns; the different starting windows overlap. [Full rules, charts and all twelve comparisons](https://nexustrade.io/case-studies/charlie-morris-bitcoin-gold). For people planning to hold crypto for years, what rules do you use to limit risk without abandoning your long-term position? *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/CryptoMarkets) if you have any questions or concerns.*

agMu9

Just use some real decentralized stablecoin, like $BOLD by Liquity: https://www.liquity.org/