Gregory Mall of Lionsoul Global has published a follow-up analysis backtesting bitcoin sizing strategies within a traditional 60/40 portfolio. The research, featured in CoinDesk’s Crypto Long & Short, simulates how a direct bitcoin position, a large-cap crypto basket, and a trend-managed sleeve perform across bull, bear, and sideways markets.
Backtesting the 60/40 with Bitcoin
Mall’s work explicitly asks not what asset to include, but how much of it can be held through volatile cycles. The findings suggest that the method of bitcoin exposure—whether held outright, diversified across top assets, or governed by a trend-following overlay—produces markedly different risk-adjusted returns. This nuance challenges the common assumption that simply adding bitcoin to a portfolio guarantees improved outcomes. As explored in our earlier article Why Bitcoin’s 500-Day Rule Faces Its Biggest Test Yet, bitcoin’s long-term resilience often depends on timing and discipline, not just allocation.
Why the Holding Method Matters More
During both bear phases and sideways ranges, the trend-managed sleeve significantly reduced drawdowns while preserving upside capture. This stands in contrast to the outright bitcoin position, which amplified both gains and losses. The large-cap basket offered a middle ground, but its performance hinged on the composition of altcoins. Importantly, the backtest reinforces that portfolio construction tools like trend filters can mitigate the psychological stress of holding volatile assets—an insight that resonates with ongoing custody debates. The recent Coldcard Exploit Sends Bitcoin Holders Back to Exchanges in Stark Reversal of FTX Self‑Custody Trend highlighted how market events can abruptly shift preferred holding strategies.
Research from Galaxy Digital further underscores the security risks associated with supposedly safe storage methods. As detailed in Bitcoin Cold Wallets Drain $70M in Attack That Never Touched Hardware, Galaxy Research Reveals, even hardware-based cold storage was vulnerable to a novel attack vector. Such incidents add weight to Mall’s argument that how an investor holds bitcoin—whether through cold storage, ETFs, or managed products—introduces a layer of operational risk that can overshadow simple allocation math.
For institutional allocators, the implication is clear: the “right” bitcoin allocation cannot be determined in isolation from the execution method. A modest allocation to a trend-following product might deliver better risk-adjusted performance than a larger, unmanaged stake. As the digital asset market evolves, portfolio sizing debates must account for the full stack of custody, governance, and risk management tools available.
