Bitcoin's return over the past three years appears to have depended heavily on a very small number of sharp rally days. It posted a high gain over the full period, but performance drops sharply if some of the biggest up days are excluded, the analysis showed.

On Oct. 6 (local time), blockchain media outlet CoinPost reported that U.S. cryptocurrency asset manager Grayscale said in an Oct. 5 report that Bitcoin's cumulative return over the past three years reached about 225 percent. It said the return turns into an 11 percent loss if the top 15 days by gains are excluded.

Using Bloomberg data, Grayscale compared returns for Bitcoin and the Nasdaq 100 over the three years through Sept. 23 last year. Bitcoin's cumulative return was about 225 percent, far above the Nasdaq 100's 109 percent over the same period.

But returns were not evenly distributed across all trading days. Excluding Bitcoin's top 5 up days lowers the cumulative return to 95 percent, and excluding the top 10 days reduces it to 27 percent. Excluding the 15 days with the biggest gains turns the return negative 11 percent.

The top 15 days account for less than 2 percent of all trading days. That means a handful of surge days had a significant impact on Bitcoin investment performance over three years.

A similar pattern appeared in the Nasdaq 100, but the impact was smaller than for Bitcoin. The Nasdaq 100's three-year cumulative return fell to 21 percent from 109 percent when the top 15 up days were excluded. Grayscale analysed this as showing that Bitcoin's long-term performance is more concentrated in a small number of strong up days than in traditional stock markets.

This return structure also carries implications for investors' market-timing strategies. Investors who wait until direction becomes clear after a sharp rally may already have missed major upside moves. Grayscale pointed out that delaying investment until price volatility falls or the market outlook becomes clearer can create opportunity costs.

It also stressed that the analysis should not be taken as an actual trading strategy. Grayscale ranked past daily returns and then recalculated cumulative returns after setting the return on the strongest up days to zero. It said it is impossible to accurately predict in advance which days will become future surge days.

The analysis also has limitations. Because it focuses on high-gain days, it did not separately address how the worst trading days, when steep declines were concentrated, affect investment performance. It also did not include whether the same pattern repeats in other three-year periods, or maximum drawdowns and trading costs that occur during actual holding periods.

Even so, Grayscale said the conclusion it sought to stress through the analysis is clear. Investors who expect long-term returns from Bitcoin should consider a strategy of maintaining continuous market exposure rather than trying to time short-term trades.

It said that because a very small number of surge days among all trading days can largely determine long-term performance, investors should guard against the risk of missing major upside moves when stepping out of the market and re-entering. The analysis shows that Bitcoin's long-term rise is not simply the result of steady gains but the result of some strong upward stretches sharply lifting cumulative returns.