The Bitcoin Strategy

🎯 The Strategy — Dynamic DCA (DDCA)

The Strategy is a smarter version of Dollar-Cost Averaging (DCA) that uses TimeToBuyBitcoin's proprietary model to decide how much to invest on each buy day. Instead of blindly investing the same amount every week or month, it adjusts your buy size based on where Bitcoin sits in its market cycle.

The core insight is simple: Bitcoin follows a long-term mathematical growth curve, and prices oscillate around this trend in predictable cycles. When Bitcoin is undervalued relative to the model (Buy Zones), The Strategy invests more aggressively. When it's overvalued (Sell Zones), it dramatically reduces purchases.

Simple DCA treats every buy day equally — $100 when BTC is at a cycle bottom is the same as $100 near an all-time high. The Strategy recognizes that not all days are equal and weights purchases accordingly.

⚙️ How It Works

The Strategy combines two signals from The Model to calculate a buy multiplier for each DCA purchase:

Signal 1 — Model Oscillator Zone

The Model Oscillator measures how far Bitcoin's price is from its expected value on the long-term trend. It outputs a value from 0% (extremely undervalued) to 100% (extremely overvalued). Based on this, each purchase gets a base multiplier:

For example, with a $100 base DCA amount: in a Deep Buy zone you'd invest $400, while in a Sell zone you'd invest only $10.

Signal 2 — Moving Average Crossover

A contrarian trend filter using EMA(150) vs SMA(350). When these moving averages signal a bearish trend (EMA below SMA), the model assumes accumulation opportunities and boosts buy-zone purchases further. In bullish conditions near sell zones, it reduces even more to avoid buying tops.

Investment Modes

Normalized — the total invested amount is scaled so both Simple DCA and The Strategy invest the exact same total. This makes the comparison fair: same money in, different allocation timing. This is the default and recommended mode for comparing strategies.

Dynamic — The Strategy invests the raw multiplied amounts without normalization. The total invested may differ from Simple DCA. Use this to see what your actual dollar outflows would look like if you followed The Strategy.

How to Use This Tool

1. Set your Start Date — drag the slider to choose when your DCA begins. Earlier dates show longer time horizons with more market cycles.
2. Choose your Base DCA Amount — this is the fixed amount Simple DCA invests each period, and the base that The Strategy multiplies.
3. Pick a Frequency — daily, weekly, biweekly, or monthly buys.
4. Compare the results — the chart shows both portfolio values over time, and the stat cards show final performance side-by-side.
5. Optionally enable Leverage — to simulate leveraged positions with stop-loss and buffer settings (see below).

Leverage (Optional — Advanced)

When enabled, each DCA purchase simultaneously opens an inverse perpetual long position using spot BTC as cross-margin collateral. This amplifies both gains and losses.

• Leverage (1x–20x) — multiplier for the perpetual position size. Higher leverage means bigger potential returns but much higher liquidation risk.
• Stop-Loss — automatically closes individual positions when their effective loss (spot + leverage combined) exceeds the set percentage. This limits damage per purchase but locks in losses.
• Safety Buffer — external USD capital held as extra collateral. It's not invested — it only protects positions from liquidation during drawdowns. Positions survive as long as total equity (spot + unrealised PnL + buffer) stays above zero.
• Liquidation — if total equity drops to zero, all BTC and positions are wiped out. DCA continues from scratch, gradually rebuilding.
• Include Trading Fees — adds realistic costs to the leverage simulation: 0.075% taker fee on every spot buy and perp open/close (Binance/Bybit standard), 0.05% slippage per execution, and 0.03%/day perpetual funding rate (long pays short, 3 sessions/day). The funding rate is the most impactful cost — it compounds daily on all open positions and amounts to roughly 11% annually on the leveraged notional. Without fees the backtest is overly optimistic; with fees enabled, expect significantly lower leveraged returns and earlier liquidations.

All leverage events (stop-loss triggers, liquidations, buffer saves) and cumulative fee totals appear in the stat cards and Event Log.

🧭 What Can You Use This Backtest For?

This isn't just a chart to look at — it's a personal planning tool. The backtester lets you simulate years of Bitcoin investing with your parameters, so you can make informed decisions about how to invest going forward. Here's what you can figure out:

1. Find Your Ideal DCA Amount

Use the base amount slider and frequency settings to model what fits your budget. See how $50/week compares to $200/month, or whether daily micro-buys outperform weekly lump purchases. The Strategy DDCA will show you how much more you could accumulate by timing your buys with The Model, compared to just blindly investing the same amount every period.

2. DCA vs DDCA — Is Dynamic Worth It?

The core question: should you just set a fixed recurring buy (Simple DCA), or should you follow The Model's signals and buy more aggressively in Buy Zones while pulling back in Sell Zones (DDCA)? Try different start dates — the answer might surprise you. In most historical windows, The Strategy DDCA significantly outperforms, but the margin varies depending on how many full cycles your backtest covers. The longer the timeframe and the more cycles it spans, the more DDCA tends to shine.

3. Calibrate Your Risk Tolerance with Leverage

Leverage is a powerful but dangerous amplifier. The backtester lets you find out exactly how dangerous — not in theory, but against real historical price data. Try different levels and watch what happens:

• Conservative (2x–3x) — mild amplification, rarely liquidated even in harsh bear markets. Good starting point.
• Moderate (4x–6x) — significant boost in bull runs, but you'll see liquidations start appearing in major drawdowns. The Event Log shows exactly when and how much you would have lost.
• Aggressive (7x–15x) — massive potential returns in the right window, but expect frequent liquidations. Pay close attention to the "Lost to SL/Liq" stat — it shows the real cost of being aggressive.
• Extreme (15x–20x) — almost certainly leads to multiple wipeouts. Use this to understand just how fast liquidation can happen, so you never do this with real money without proper risk management.

4. Dial In Your Stop-Loss Strategy

A stop-loss is your emergency brake. Too tight (e.g., 5%) and you get stopped out by normal volatility, locking in small losses that add up. Too loose (e.g., 50%) and a single crash can destroy a large chunk of capital before the stop triggers. The backtester lets you find the sweet spot by testing different percentages against real market history.

Watch the Event Log closely — it shows every stop-loss trigger with entry price, trigger price, and capital lost. This is how you learn whether your stop-loss is protecting you or just slowly bleeding you dry through premature closures.

5. Size Your Safety Buffer

The Safety Buffer is capital you set aside specifically to prevent liquidation during temporary drawdowns — money that isn't invested, just held as insurance. But how much is enough? The backtester answers this directly:

• Start with no buffer, see when liquidations happen.
• Add buffer incrementally and watch liquidations turn into "Buffer Save" events in the Event Log.
• Each Buffer Save event now shows exactly how close you came to liquidation — the equity drawdown in dollars, as a percentage of your invested capital, the ATH drawdown, and how much buffer capacity remained.
• If you see "Liq Distance: 5% left" — your buffer was barely enough. You might want more headroom for the future.
• If you see "Liq Distance: 60% left" — your buffer is oversized. That capital could be invested instead.

The goal is finding the minimum buffer that keeps you alive through historically worst-case scenarios, without tying up unnecessary capital.

6. Understand the True Cost of Trading

Enable "Include Trading Fees" to see how taker fees, slippage, and funding rates eat into leveraged returns over time. The funding rate alone (0.03%/day) compounds to roughly 11% per year on your leveraged notional — a cost that's invisible on most platforms but devastating over long periods. The "Total Fees" stat in each card shows the cumulative damage. Many strategies that look profitable without fees become marginal or negative once real costs are included.

📖 Legend

Chart Lines

Stat Card Fields

Model Oscillator Zones