Does "DCA with leverage" really make more money in Bitcoin?

Author: CryptoPunk

Five-year backtest shows: 3x leverage has almost no cost-performance advantage Preliminary conclusion:

In the past five years of backtesting, the final return of a BTC triple leverage dollar-cost averaging strategy only outperformed a double leverage by 3.5%, but at the cost of nearly zeroing out the risk. From a comprehensive view of risk, benefit, and feasibility—spot dollar-cost averaging is actually the most suitable long-term solution; 2x is the limit; 3x is not worth it. 1｜Five-year net value curve: 3x does not “widen the gap”

From the net value trend, we can see:

• Spot (1x): The curve is smooth and upward, with controllable pullbacks
• 2x leverage: Clearly amplifies gains during bullish phases
• 3x leverage: Multiple “ground-hugging” movements, long-term oscillation consumption

Although in the rebound of 2025–2026, 3x slightly outperformed 2x in the end, but over several years, the 3x net value always lagged behind 2x. Note: The leverage part in this backtest uses daily rebalancing, which causes volatility decay. This means: The final victory of 3x heavily depends on the “last phase of the market” 2｜Final return comparison: Marginal returns of leverage rapidly diminish

The key is not “who earns the most,” but how much extra:

• 1x → 2x: Earned approximately $23,700 more
• 2x → 3x: Only earned approximately $2,300 more

Returns almost stop growing, but risks increase exponentially 3｜Maximum drawdown: 3x is approaching “structural failure”

Here is a very critical real-world issue:

• -50%: psychologically tolerable
• -86%: needs +614% to recover
• -96%: needs +2400% to recover

In the 2022 bear market, 3x leverage has essentially “mathematically failed”, and subsequent profits are almost entirely from new capital injected after the bottom of the bear market. 4｜Risk-adjusted returns: spot is actually the best

This set of data shows three things:

• Spot has the highest risk-adjusted return
• The higher the leverage, the worse the “cost-performance” of downside risk
• 3x leverage remains in deep correction zones long-term, with extremely high psychological pressure

What does the Ulcer Index = 0.51 mean? It indicates that the account is “long-term underwater,” almost never giving you positive returns Why does 3x leverage perform so poorly over the long term? The reason is simple:

Daily rebalancing + high volatility = continuous decay

In volatile markets:

• Rising → add to position
• Falling → reduce position
• No change → account continues to shrink

This is a typical volatility drag. And its destructive power is proportional to the square of the leverage multiple. On high-volatility assets like BTC, 3x leverage bears a 9-fold volatility penalty. Final conclusion: BTC itself is already a “high-risk asset.” The answer from this five-year backtest is very clear:

• Spot dollar-cost averaging: the best risk-reward ratio, suitable for long-term execution
• 2x leverage: aggressive upper limit, only suitable for a few
• 3x leverage: extremely low long-term cost-performance, not suitable as a dollar-cost averaging tool

If you believe in BTC’s long-term value, then the most rational choice is often not “adding another layer of leverage,” but letting time work in your favor rather than becoming your enemy.