Developer's crypto trading bot returned 4% in 3 years; buy-and-hold Bitcoin returned 128%
A software developer spent months building an algorithmic cryptocurrency trading bot and rigorously back-tested it over three years of out-of-sample data. The best-performing strategy yielded only +4.33%, while simply buying and holding Bitcoin over the same period returned +127.77%. The developer identified three major pitfalls that distorted early results: look-ahead bias, zero-fee assumptions masking Kraken's 0.26% per-side taker costs, and overfitting through excessive indicators. Adding more technical indicators and trading at faster timeframes both made performance worse, largely due to compounding fees. The developer published the underwhelming results intentionally, arguing that building a system incapable of self-deception was the project's most valuable outcome.
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