Can dual-currency winning truly navigate bull and bear markets? Six years of backtesting provides the answer.

Author: Michel Athayde

Can Dual-Currency Winning Truly Survive Bull and Bear Markets?

Our backtest of six years from 2020 to 2026 reveals:

The same dual-currency winning approach, just with different methods of selling calls, can result in nearly double the final returns.

Data shows that the issue isn’t with the strategy itself, but with human nature.

In the crypto market, “Dual-Currency Winning” (Wheel Strategy) is often seen as a rent-collecting tool to navigate bull and bear markets. But how do different underlying logic implementations reshape long-term return distributions?

To uncover the truth, we backtested Bitcoin and Ethereum through the full bull and bear cycles from 2020 to 2026. In this sample, which includes crashes and epic bull runs, we compared two very different dual-currency strategies:

• Standard Dual-Currency Winning (Rolling Strike): Market-adaptive. After acquiring spot, each time dynamically selling a covered call at 105% of the current price.
• Break-Even Dual-Currency Winning (Fixed Anchor): Cost-anchored. Once buying at a high, regardless of how much the price drops, always sticking to the previous strike price for selling calls, never giving up the position until breaking even.

This is no longer just a simple “seller vs. holder” contest but a deep test of how trading psychology influences long-term returns.

Key Data: Reassessing Risk and Reward

(Note: Backtest from 2020-2026, puts at 30% annualized, calls at 25% annualized, 7-day periods)

With this real data, we need to revisit two core questions in trading.

The Risk-Reward Balance of the Standard Dual-Currency Strategy

Many once believed that the standard dual-currency approach would be severely left behind in a bull market, but data shows that as long as you keep a 5% upside buffer (spot price * 1.05), it demonstrates a strong risk-reward balance over full bull and bear cycles.

In a 50/50 asset mix, its Sharpe ratio (0.983) far surpasses the “HODL” (0.85), and it dramatically reduces deep drawdowns from nearly -78% to about -49.9%.

Its advantage isn’t based on market prediction but on the mechanism of “continuously dynamically raising the strike price.”

Every price movement prompts the standard approach to adjust its target relentlessly. Rolling essentially resets costs during a bull run, while Fixed Anchor keeps confirming errors. The standard method sacrifices a tiny portion of potential gains to achieve a smoother capital curve and greater strategic depth.

“Cost Anchoring” Is the Most Expensive Psychological Comfort

The most thought-provoking insight is the complete underperformance of the “Break-Even (Fixed)” approach. Whether in returns or drawdown control, it falls far short of the standard method.

This exposes a common human weakness in trading: anchoring bias. If you buy at a high of 60,000 and hold onto a 60,000 strike call while the price drops to 30,000, you not only lose the ability to “stop the bleeding” with option premiums during a prolonged bear market but also risk missing the subsequent major rally when the market V-reverses, as your position remains anchored at 60,000.

The break-even strategy seems conservative but is actually fighting trend with time. In a trend-driven market, time often favors the trend. Clinging to “not losing money” can cause you to miss the biggest cyclical gains.

Conclusion

Markets are volatile, but data doesn’t lie.

In trend assets like Bitcoin and Ethereum, the real risk isn’t just drawdowns but being psychologically anchored, limiting upward potential.

The standard dual-currency approach teaches us:

As long as you keep dynamic adjustments and continuous rolling, seller strategies can coexist with trends.

And the break-even approach reminds us:

The market won’t change direction because of your cost basis.

Discipline is far more important than just breaking even.