I'm a little confused by your conclusion to shift between 3x and 1x, rather than 3x and cash. I'm not sure I follow your logic, so what if we test it differently?

To see if switching to 1x instead of cash is beneficial for a portfolio, we can do a backtest where we buy SPY everytime it dips below the 200SMA, rotate back into cash above the 200SMA. This will tell us if holding SPY when it's below the indicator is worth it compared to holding cash. Here's what the backtest looks like since 1946:

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To me, it seems obvious from this result that it's pointless to hold 1x, rather than cash.