Why Passive Crypto Investing Fails (and What to Do Instead) - Lookonchain

Why Passive Crypto Investing Fails (and What to Do Instead)

The article argues that passive, buy-and-hold crypto investing is flawed, as it offers lower returns with far greater risk than the stock market. Instead, it suggests that crypto’s true advantage lies in active trading strategies. A simple long/short strategy, for example, demonstrated vastly superior risk-adjusted returns, proving that to succeed in the volatile crypto market, you must be an active participant, not a passive one.

If you’re allocating capital to the broad crypto market, here’s what you need to know:

Passive investing underperforms.
Not just in returns, but in risk.

We looked at the data. Here's what actually makes sense:

Take the Binance Spot Composite Index vs. the S&P 500:

S&P 500:
• 69% total return
• 35% max drawdown

Binance Spot Composite Index
• 59% total return
• 90% max drawdown

Stocks gave better returns, with nearly 3x less downside risk.

So what does that mean?

Long-term investing in the broad crypto market looks weak on a risk-adjusted basis.
The volatility simply isn’t justified by the returns.

But that doesn’t mean crypto has no edge.

You just have to approach it differently.

Let’s take a look at a simple model:

We tested a simple long/short breakout strategy across the Binance spot market. No leverage. No curve fitting.

Result:
• +4,300% total return
• −45% max drawdown

This is a completely different risk/reward profile.

Would we trade this system in isolation?
Probably not.

But if you’re choosing between buy-and-hold crypto vs. active breakout trading…

There’s no contest.

The trading strategy delivers significantly more return per unit of risk.

On average buy & hold in crypto does not make sense.

Crypto trading strategies, even simple ones, can offer vastly superior risk-adjusted returns.

Relevant content

Arthur Hayes: Net worth and on-chain holdings

Arthur Hayes is best known as the former CEO of BitMex. However, he is also an influential and provocative essayist and crypto commentator who was convicted, then pardoned, for violating the Bank Secrecy Act

Arkham/1 days ago

ArthurHayes BitMex ENA

The Altcoin Season Playbook: My Top Picks for a Massive Rally

The author predicts that a new altseason is starting as money rotates into Ethereum and large-cap altcoins. To prepare, the author shares a personal portfolio of top picks across the DeFi, AI, and memecoin narratives, including $PEPE, $SOL, and $ENA. The strategy is to position now before the rally, with a plan to scale out of positions at new all-time highs.

Mister Crypto/2 days ago

Altseason Altcoins DeFi AI

Recession Warning: Why a Bitcoin Drop to $90K is Inevitable

This article argues that a recessionary crash is inevitable, based on the historic inversion and normalization of the yield curve. Despite a longer-than-usual delay, the author maintains a firm bearish outlook and predicts Bitcoin will drop to the $90K–$94K range. The author outlines a clear plan to sell spot holdings and take short positions in anticipation of this coming move.

Doctor Profit/3 days ago

Bitcoin Macroeconomy Bearish

Massive Supply Chain Attack Hits Crypto Ecosystem via NPM

A massive supply chain attack has compromised 18 foundational NPM packages, affecting billions of weekly downloads. Hackers pushed malicious code designed to be a crypto clipper, which silently swaps wallet addresses to steal funds. The incident was quickly caught, but it highlights a critical vulnerability in the core infrastructure of the crypto ecosystem.

StarPlatinum/4 days ago

SupplyChainAttack NPM Phishing Cybersecurity

Fed Rate Cuts Could Spark Altseason. Here Are 5 Alts to Watch.

The article argues that upcoming Federal Reserve rate cuts will inject trillions in liquidity, triggering a new macro cycle for crypto. This shift in capital from traditional assets to riskier ones is expected to ignite a massive altseason. The author identifies this as the perfect setup and lists several low-cap altcoins with high potential for explosive growth.

Pepesso/5 days ago

FedRateCuts Altseason Altcoin

The Downfall of a Crypto Influencer: The Story of Gainzy

A look into the controversial history of crypto influencer Gainzy reveals a pattern of profiting from shilling and insider moves, not trading. The story alleges his involvement in an ICO rug pull and secret token sales as a sponsored streamer. Now on PumpFun, Gainzy is accused of crashing his own memecoin live on stream, with a new wallet profiting from his followers losses.

StarPlatinum/2025.09.05

Influencer RugPull PumpFun