Capturing trends or wearing down principal? A comprehensive analysis of recent performance of BTC3L / BTC3S

Since March 2026, Bitcoin’s price trend has gone through a complete “four seasons” cycle—surging then pulling back, bear dominance, wide-range oscillation, and then a short-term long/short reversal. For investors trading leveraged tokens such as BTC3L/3S and ETH3L/3S on the Gate platform, this period is undoubtedly an excellent test of trading strategy and risk awareness.

Prequel market review: Bears fully win, then fall into oscillation and erosion

Phase 1: Surge, pullback, and bears taking control (mid-March)

In mid-March, Bitcoin began its push higher from about $74,000 and briefly touched a high of $76,000. But within just a few days, the market turned into a bearish trend, with funds significantly shifting toward shorting instruments. Data from the Gate platform shows that BTC3S (3x short) rose 15.96% within 24 hours, with trading volume reaching 8.6 million USDT; ETH3S surged 17.53%, with trading volume exceeding 12.31 million USDT. In sharp contrast, BTC3L and ETH3L fell 14.83% and 17.56%, respectively, over the same period. This is the classic leverage-token compounding effect in a one-way down move—because the rebalancing mechanism’s “profit and add” lets the short side’s profits run freely.

Phase 2: Wide-range oscillation and wear-and-tear becomes visible (late March to April)

After that, the market didn’t break into a clear direction. Bitcoin repeatedly battled in the $65,000 to $75,000 range. Entering April, the wide-range oscillation kept spreading. Then the “wear-and-tear effect” of leveraged tokens began to show: in choppy markets, the rebalancing mechanism becomes an “invisible killer” of net asset value—after declines it cuts positions, and after rallies it adds positions. Even if the BTC price returns to the starting point, positions may still suffer permanent losses.

Phase 3: A pulse-like counterattack by bulls (mid-April)

On April 14, Bitcoin jumped 4.72% in a single day to $74,437. Ethereum, even more strongly, surged 7.64%. Driven by this momentum, BTC3L’s net value could theoretically gain about 14% in a single day, while BTC3S’s net value would correspondingly drop by the same magnitude. On the day, U.S. Bitcoin spot ETFs recorded net inflows of $411.5 million: BlackRock’s IBIT contributed $291.8 million in a single day, and Strategy invested an additional $1B to buy 13,927 BTC—bringing total holdings to 780,897 BTC. However, this rally was more like a concentrated bullish counterattack than a fundamental reversal of the broader trend.

Short-cycle turning point: A “short squeeze” amid crowded shorts and signals from international capital

From the end of April to early May, the market saw a short-term trend reversal. After Bitcoin formed a bottom between $74,000 and $78,000 at the end of April and early May, it started pushing upward. Between May 4 and May 5, Bitcoin briefly surged to $80,594, setting a new high since late January.

This rise showed a typical short-squeeze structure. Previously, the funding rate for Bitcoin perpetual contracts had been significantly negative for several consecutive days, meaning the derivatives market sentiment had been persistently bearish and accumulated a large volume of short positions. After Bitcoin broke through the critical $80,000 level, many short sellers were forced into a chain of liquidations and reverse buying, further driving prices higher. In just 24 hours, around $370 million in leveraged positions across the overall crypto market was forcibly liquidated, including approximately $319.3 million in short contracts.

At the same time, Bitcoin spot ETFs saw cumulative net inflows of $2.43 billion in April. Although the capital inflows were not evenly distributed, they still provided real support for BTC’s price. In this round of sharp short-term surge, if traders had identified the signal that shorts were crowded early and positioned in BTC3L (3x long), the return would have been extremely attractive.

Current market status and next direction (May 6, 2026)

As of May 6, Bitcoin has returned to the $81,000 area after three months. On the daily chart, the MACD shows a bullish crossover, and the RSI is in a neutral zone around 48. The short-term bullish structure is fairly intact, but the resistance zone of $82,352 - $85,777—defined by the 100/50-week EMA—still stands out. Notably, the perpetual funding rate had been negative for a long time. Even after the short-squeeze rally, this signal hasn’t been fully eliminated: short positions have only been liquidated locally, not cleared systematically. This means bullish momentum still has some room to continue, but traders should stay alert for the risk of a short-term technical pullback.

Recap of leveraged token mechanics: When to use, when to be cautious

The net value percentage change of BTC3L and BTC3S is equal to 3 times the percentage change of Bitcoin. For leveraged tokens, there are several key points to keep watching:

• The double-edged sword of rebalancing: Gate uses a dual rebalancing mechanism—daily routine checks and temporary interventions during periods of sharp market volatility. In one-directional trends, “profit and add” creates a compounding effect, significantly amplifying returns; in choppy markets, “loss and reduce” causes permanent net value erosion.
• The convenience of never being forced into liquidation—and the cost: Leveraged tokens eliminate the risk of forced liquidation, but a daily 0.1% management fee (used to cover costs such as the funding rate on perpetual contracts) continues to erode principal over long holding periods.
• A reminder on applicable scenarios: Leveraged tokens are a powerful tool for short-term trend trading, not a long-term holding or allocation-type asset. They perform best in clear, one-directional markets, and their cost-effectiveness is relatively low in sideways ranges.

Summary

Looking back from mid-March 2026 to early May, BTC3L and BTC3S went through a complete cycle of “surge and pullback → bear dominance → wide-range oscillation → a bullish rebound short squeeze.” During the March downtrend, BTC3S’s single-day gain of over 15% demonstrated the ability of leveraged tokens to capture trends. The wear-and-tear effect during April’s wide-range oscillation serves as an important warning: the cost of getting the direction wrong is also amplified by 3 times. Entering May, Bitcoin has returned to the $81,000 level, and the bearish funding-rate signal has not been fully washed out. Short-term bullish direction still has some momentum. As crypto investors on the Gate platform, you should make full use of the unique advantages of leveraged tokens—“spot convenience + leveraged efficiency”—but you must also adjust your strategy flexibly according to the current market phase: enter decisively when the trend is clear, and remain patient when the direction is unclear.