Bear Market LP Strategy: How Optimized Ranges Outperform HODL by Up to 111% on Uniswap V3
Backtest data from the 2025-2026 bear market reveals that optimized LP ranges dramatically outperform HODL. Here's the data from 178 days of ETH bear market, and the exact settings that work.
Most concentrated liquidity guides tell you the same thing: tighter ranges earn more fees. But when the market turns bearish, the real question isn't about range width — it's about rebalancing costs. When every rebalance during a downtrend locks in losses, the cost per rebalance matters enormously.
We ran backtests across six Uniswap V3 pools on Base using real price data from the 2025-2026 bear market — 178 days of ETH declining 55.5% and 208 days of BTC declining 41.9%. The results: optimized Snuggle positions outperformed HODL by 10% to 111% across all pools during the downturn.
This isn't theory. These are real numbers from real pools.
The Core Finding: Rebalance Cost Determines Everything
Here's the mechanism that makes LP rebalancing risky in bear markets:
- Price drops below your range — you're now 100% in the falling asset
- Your position rebalances — it creates a new position at the current price
- Price keeps dropping — the process repeats
- Each cycle accumulates costs: protocol fees, impermanent loss, opportunity cost
Traditional LP managers charge 0.5-2% per rebalance. At those rates, even a few dozen rebalances during a bear market compounds into devastating drag.
Snuggle charges just 0.04% per rebalance — with zero swap fees, zero slippage, and zero MEV. This ultra-low cost changes the calculus entirely: tight, active strategies that would be prohibitively expensive on other platforms become viable, even profitable, on Snuggle.
The Data: Bear Market Backtests by Pool
Here's what our optimizer found across the detected bear periods (178 days for ETH pools, 208 days for BTC pools):
WETH/USDC — The Star Performers
| Pool | Range Width | Delay | Bear Period Return | ETH HODL | vs HODL |
|---|---|---|---|---|---|
| 0.30% fee | 1.5% | 2h | +55.4% | -55.5% | +111.1% |
| 0.05% fee | 2% | 2h | +6.3% | -55.5% | +62.0% |
WETH/USDC shows the most dramatic outperformance. During the 178-day ETH bear market, the optimized Snuggle position on the 0.30% pool returned +55.4% while ETH dropped 55.5% — an astounding 111 percentage point outperformance.
Even the more conservative 0.05% pool turned a devastating ETH crash into a +6.3% gain, outperforming HODL by 62 percentage points. At Snuggle's 0.04% fee, the tight ranges earn maximum trading fees while the minimal rebalancing cost prevents the drain that destroys LP positions on higher-fee platforms.
cbBTC/USDC — Consistent Downside Protection
| Pool | Range Width | Delay | Bear Period Return | BTC HODL | vs HODL |
|---|---|---|---|---|---|
| 0.05% fee | 1% | 18h | +10.6% | -42.5% | +53.2% |
| 0.30% fee | 3% | 6h | +9.3% | -42.5% | +51.9% |
BTC pools deliver consistent protection across both fee tiers. The 0.05% pool uses an ultra-tight 1% range with patient 18-hour delays, while the 0.30% pool runs a 3% range with more active 6-hour rebalancing. Both turned a 42.5% BTC crash into positive returns — that's 51-53 percentage points of downside protection.
WETH/cbBTC — The Honest Exception
| Pool | Range Width | Delay | Bear Period Return | HODL | vs HODL |
|---|---|---|---|---|---|
| 0.05% fee | 2.5% | 6h | -14.3% | -23.9% | +9.8% |
| 0.30% fee | 2.5% | 6h | -11.8% | -23.9% | +12.2% |
WETH/cbBTC is a same-direction pair — both assets tend to move together, which limits the fee-earning opportunity. When both sides of your LP are falling, there's less price oscillation to capture fees from. Still, the Snuggle position beat HODL by 10-12 percentage points even in this challenging pair.
Where WETH/cbBTC shines is the long-term view: over the full 365+ days, these positions returned +76-79% vs HODL's +9%. Same-direction pairs need time to let the fee accumulation compound.
Why 0.04% Changes Everything
The key insight from our optimization isn't just about range width — it's about the cost of participation.
At 0.04% per rebalance with zero swap fees, a position that rebalances 500 times over 6 months pays only 2% in total fees. Compare that to a traditional LP manager charging 1% per rebalance — the same 500 rebalances would cost a catastrophic 500%.
This means Snuggle can use tight, active strategies that capture maximum trading fees while keeping total cost negligible. The optimizer found that at 0.04%, tight ranges (1-3%) with frequent rebalancing (2-6 hour delays) outperform wider, more passive strategies — because the fee income from tight concentration overwhelms the tiny rebalancing cost.
The Full Year: Every Pool Beats HODL
While the bear period tells the defensive story, the full 365-day view shows Snuggle's all-weather potential:
| Pool | Setting | 365d Return | vs HODL |
|---|---|---|---|
| WETH/USDC 0.30% | 5%/2h | +178.4% | +196.1% |
| cbBTC/USDC 0.05% | 3%/8h | +90.7% | +115.9% |
| cbBTC/USDC 0.30% | 3%/6h | +77.5% | +102.7% |
| WETH/cbBTC 0.30% | 2.5%/8h | +78.6% | +68.5% |
| WETH/cbBTC 0.05% | 2.5%/8h | +75.8% | +65.7% |
| WETH/USDC 0.05% | 1%/14h | +41.7% | +59.4% |
Every single pool outperformed HODL over the full year by +59% to +196%. The standout is WETH/USDC 0.30% at 5%/2h — a +178% return that nearly tripled the starting investment.
The Pattern Across All Pools
After analyzing all six pools across the full bear period, the pattern is consistent:
- Low fees unlock tight ranges. At 0.04% per rebalance, tight ranges (1-5%) capture maximum trading fees without the cost drag that punishes them on higher-fee platforms.
- Market condition determines the optimal config. Bear markets favor tighter ranges with shorter delays. Sideways markets favor wider ranges (7-12%). Bull markets are mixed.
- Stablecoin pairs outperform in bear markets. WETH/USDC and cbBTC/USDC beat HODL across every timeframe. Same-direction pairs (WETH/cbBTC) need longer holding periods.
- The vs-HODL gap is enormous. 10% to 111% outperformance isn't marginal — it's the difference between devastating losses and actual profits during a bear market.
Recommended Bear Market Settings
Based on our multi-timeframe optimization at 0.04% protocol fee:
| Pool Pair | Range Width | Rebalance Delay | What to Expect |
|---|---|---|---|
| WETH/USDC (0.30%) | 1.5% | 2 hours | Best bear performer, +111% vs HODL |
| WETH/USDC (0.05%) | 2% | 2 hours | Strong HODL outperformance, +62% vs HODL |
| cbBTC/USDC (0.05%) | 1% | 18 hours | Positive returns in bear, +53% vs HODL |
| cbBTC/USDC (0.30%) | 3% | 6 hours | Consistent protection, +52% vs HODL |
| WETH/cbBTC | 2.5% | 6 hours | Tracks HODL in bear, strong long-term |
These are the defaults Snuggle uses when you select "Bear" market bias in the simulator.
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Run Backtest Now →What Changes When the Market Turns?
These settings are specifically optimized for bear/declining markets. When the trend shifts:
- Sideways market: Wider ranges (7-12%) work well because mean reversion is your friend — price bounces back through your range
- Bull market: Mixed — some pools favor tight ranges for fee capture, others benefit from wider ranges to ride the trend
- Uncertain: Use the "All Markets" preset — it's optimized across all conditions simultaneously and is the default for new users
The Snuggle simulator lets you toggle between All Markets, Bear, Sideways, and Bull presets to see how different settings perform under different conditions. When you select a market bias, the simulator automatically loads the detected period for that condition so you're testing against real market data.
The Takeaway
Bear markets destroy LPs who rebalance on platforms with high fees. Every rebalance is a cost, and when those costs are 0.5-2% per trade, the compounding damage is brutal.
With Snuggle's 0.04% fee and zero-swap architecture, the equation flips. Active strategies that would be suicidal on other platforms become the optimal approach. Tight ranges capture maximum fees, frequent rebalancing keeps you in range, and the total cost stays negligible.
The data is clear: Snuggle's optimized bear market settings outperformed HODL by 10% to 111% across the 2025-2026 downturn. Not by avoiding the market, but by participating at a fraction of the cost.
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Start Earning Now →All returns are backtested using historical price data from the 2025-2026 market period and do not guarantee future performance. Bear periods: ETH 178 days (Aug 13, 2025 – Feb 7, 2026, -55.5%), BTC 208 days (Jul 14, 2025 – Feb 7, 2026, -41.9%). Liquidity provision involves risk, including impermanent loss and smart contract risk. This is not financial advice — do your own research.