Bitcoin Forum

Hello! I'd like to seize this moment to offer my insights on the Dollar-Cost Averaging (DCA) strategy, aiming to clarify its concept and its intended purpose for those who may still find it unclear.

DCA involves consistently investing smaller, equal amounts over time, as opposed to making large, irregular crypto purchases. Think of it as making payments for a product in installments, at regular intervals, until the total is paid off. When you regularly invest in your preferred cryptocurrencies, you automatically accumulate more assets over time, regardless of market fluctuations. This can help you grow your holdings and potentially reduce your overall average cost during market dips.

In contrast, a lump sum payment is a one-time investment, the opposite of DCA.

Let's delve into how DCA operates:

Imagine the current price of BTC is $20,000, and you're a high-earning individual looking to invest in this asset. If you make a lump sum investment, you would acquire one BTC at a cost of $20,000.

However, with DCA, you spread that $20,000 across five equal $4,000 purchases, resulting in costs of $20,000/BTC, $15,000/BTC, $5,000/BTC, $5,000/BTC, and $25,000/BTC. This approach yields an average cost basis of $18,000, and you'd have 2.3 Bitcoin. When Bitcoin's price eventually rises, your gains can be amplified because you lowered the average cost of acquiring your holdings. With DCA, you steadily accumulate more Bitcoin, even during market ups and downs.

To illustrate, your first purchase acquires 20% of 1 BTC at $20,000. The second purchase, at $15,000, gets you 26.66% of 1 BTC. Your third and fourth purchases, both at $5,000, result in a total of 80% of 1 BTC with each buy. Your final purchase, at $25,000, represents about 16% of 1 BTC. In total, you've accumulated around 2.3 BTC.

However, it's important to note that DCA may not always work in your favor. In some situations, it could increase your average cost, especially during a bull run. Nevertheless, the purpose of DCA is to spread your investments incrementally, which can be advantageous in the long run. It provides a balanced approach to accumulating assets, ensuring you still acquire your desired cryptocurrency. I hope this explanation sheds light on the essence of DCA.

DCA does not only include investing small amount of capital over time. Small or big capital for each time of DCA depends on your total capital for investment and your DCA plan.

You even don't have to use a same amount of capital for each DCA round. Sometimes you can use smaller or bigger amount of capital for a DCA round. Because it can depends on your feeling about the market trend as well as your available funds for DCA at that time. If you see the market is good and you have money in hands, you can DCA with doubled capital than your normal amount.

If your income flow suddenly decreases, you can stop DCA or DCA with smaller capital amount.

Many things that affect your DCA plan and don't bind yourself with any amount of capital. Even you try, you will fail to follow it.

Want to have DCA math and tool, use it https://dcabtc.com/

You can technically do it like this and twist the strategy in whatever way you want, but the main purpose of DCA is to just buy an equal amount every time, to eliminate the psychological/emotional factor of markets. Changing the amounts every time kind of defeats the purpose of doing DCA.

I didn't bother to check the website you attached because you are already deviating from the true reason and scope of DCAing in investment. This is an investment strategy that has longlived before cryptocurrency and the main aim is to divide your money into equal and smaller parts and invest regularly. What you are describing here is quite the opposite as your plans will not be equal and the investment will be irregular. All these are what DCA itself preaches against.

However, you own your money and you can invest it the way you want, and just like me, I practice something similar to what you explained, but we should never call it true DCA, it's a different thing entirely.

These are nuances. What is classically called DCA, pure DCA, would be buying the same quantities at the same time intervals. If it is not so exact but we can buy more depending on the available money or we vary the intervals depending on the availability (and we buy an extra amount for example on the day we receive a bonus) it would already be a variant of DCA, which can have more volatility.

With pure DCA in an asset that appreciates over the long term what we do is to dampen volatility and as we move away from the same intervals and equal amounts we risk having more volatility.

Very strange it seems every month there is some DCA thread on bitcointalk.

DCA works but generally if you are unlucky and buy during the peak or DCA sell during the bottom then it won’t work out best for you.

It’s best to spread it apart, maybe few months apart. That way you aren’t like the El Salvador president who bought bitcoin near the peak and has still a long way until he breaks even. Same with Saylor. Bought large amounts near the peak and still hasn’t broken even.

The unpredictability of Bitcoin's price is perfect for this approach. Regardless of how good you are in your technical and fundamental analyses, you can never have a guarantee that you will always be right. You cannot tell with certainty whether Bitcoin would rise to $30,000 or fall to $25,000 next month. Doing away with betting on either of those possibilities and just buy at a determined interval is the perfect approach.

There was somebody here who commented that speculation can affect the DCA approach. I don't agree.

Yea noticed that too
What's your actual dca strategy? (https://bitcointalk.org/index.php?topic=5466193.msg62818339#msg62818339)
percentage of your income you dollar cost average in bitcoin (https://bitcointalk.org/index.php?topic=5466644.0)

Op, this doesn't totally defines DCA. Dollar Cost Averaging (DCA) is a strategy where you invest a set amount of money into an asset regularly, no matter its current price. It's crucial to watch how the market goes up and down and change your DCA plan if needed. If you earn more or the market shifts a lot, you can adjust your investment strategy. Being flexible is important because the market can change, affecting your initial  investment plan.

Applying the main DCA which is the same amount at equal intervals will favor those who already have the money to invest based on their plan. Since the money is already available they can easily invest the same amount at equal intervals. It can also favor those that have a stable and consistent income.  But when someone's earning is not consistent DCA might become inconsistent. The investor will buy more when his income for a period is high and less when his income drops.

That is not DCA.

DCA is based on two simple principals:

1. You believe that the price will rise over the long-term.
2. You acknowledge that you don't know what the price will do over the short term.

DCA has been shown to be a better investment strategy than timing the market based on "your feeling about the market trend". The reason is that people have biases that cause poor judgment. The purpose of DCA is to avoid these biases.

Honestly, I don't have a fixed amount when I buy cryptocurrency or bitcoin. It's just simple: if I have extra money, even a small amount like $10 or $15, I immediately buy it for cryptocurrency. Sometimes it's once a week, and sometimes twice.

Although there is nothing wrong if you do it with a fixed amount every week, as long as it is worth it if there is an opportunity, we are not sure when we will have a lot of profit in our lives. Because there are also times when it is very low, I want to save coins. That's why I didn't have anything to buy on the day itself, which was very low.

The whole point of using DCA is not having to consistenly check the market and obsess & stress about price fluctuations. Instead, you are supposed to buy the bitcoin at the regular intervals no matter the current price, beliveing that price in the long term will go up.

What you explained is basically trying to time the market, which in the end is more about luck than anything else and is opposite of DCA.

Make it short, DCA is a strategy where you buy an asset regularly every day/week/month without need to care about the price or anything else.

Aside from lump sum, there's another strategy called average down where you buy an asset regularly during the asset's price is declining.

I think the best is DCA, but you can mix with average down strategy when the price drop a lot e.g. 10% in a day.

You can plan your DCA strategy any how you want but you won't be practicing true DCA if your investment or annual buys are not equal and at intervals. The true purpose of DCA is help reduce your average cost when acquiring an asset expecially in  very volatile conditions so you won't have to worry about the price change in the market.
I'll advice that you plan your DCA strategy according to your income or  capital at hand . I don't advice DCA if your not steady on your income

Even though you gave a thorough explanation, it seems like you're indirectly pushing DCA as the best way to invest in crypto. And I have to strongly disagree with that. Yes, DCA can be useful during market downturns, but we shouldnt oversimplify things. Its hard to know what will happen in the crypto market, and every plan has flaws.

Also, the way you showed the BTC price makes it look like prices are stable, which they are not at all. It makes sense to spread out purchases, but what if the market keeps going up? Every time you bought something, the price went up!

Always keep in mind that there is no guaranteed way to make money with investments. If you promote DCA without explaining its possible downsides, you might leave yourself vulnerable

DCA Means Doller cost Average. Following DCA is a matter of personal preference as it only minimizes everyone's losses. To calculate, let's say you invest $1000 in Bitcoin without investing the entire amount in one transaction.  Divide it into parts like investing $100 per week so you can buy bitcoins at different prices to minimize your losses.  And if you invest the entire $1000 in one transaction, you will lose a lot if the price of Bitcoin goes down, and if the price goes up, you will gain more.

I think it's not wise to call DCA an Installment and then say that we have to pay it until it's paid off. Because we are not paying to anyone instead we are accumulating BTC as much as we can and in DCA we just have to accumulate BTC according to some time interval and the investment should be the same (but not necessarily as it is not writer anywhere that you have to invest a fixed amount of fiat into the BTC). Besides all that you do understand what is DCA but failed to explain it. Because your example is also very tough to understand.

But still, it makes sense but for those who are already pro or not newbies here, but the aforementioned example lacks some simplicity. I hope you will not mind my words.
Many people might not agree with my opinion which is, that we should not do DCA in a bull run instead the best time is the one when the accumulation phase starts. And accumulation phase starts after the bull run. In that phase, we should do DCA as much as we can and also buy on dips and keep in mind that we should keep some funds in emergency too. I prefer not to do DCA in Bull Run because in bull run I prefer to book the profit that I have made while the accumulation of it. I hope you will understand my point.

hmm, what if I'm in the same situation what would I do? I would choose to do my investment using the DCA'ing technique. This is the best approach where we can have the best way to get more profit and when we look at our portfolio or calculate our "PNL" it probably shows us the profit.

DCA'ing is not always about just buying at dips somehow we wish to buy in the dip but this approach doesn't represent buying only dips at all. well, what would I say about  DCA'ing I would say if the person has his cash flow he should accumulate BTC using the DCA technique like S/he must invest 10$ to100$ each week according to his/her money he/she has.


Hmm I agree, accumulation of BTC is not always about buying just dips most probably when you are doing DCA. What do I think the person who has the best potential for his cash inflow s/he is earning the best amount weekly. S/he need not to worry about his emergency funds. In case, S/he needs some money they would not withdraw their BTC as emergency funds because they have the potential of cash inflow from which they will be able to fulfil their desire or needs. Cash inflow gives the ease of mind So, At the end of the day they would be able to register their planned goal of having a good profit and their way to accumulation of BTC will stay as it is.

DCA strategy is mostly followed by small investors. But the big investors don't care about DCA. But DCA is a good strategy for investing in crypto. And people who are working or have low income but are interested in investing in crypto cannot invest huge amounts so even if they don't want to follow DCA automatically becomes DCA. Because most of them invest some amount after getting salary every month

DCA is a great way to accumulate BTC, but it depends on how you sell your holdings and when you sell it. DCA is a simple thing. You put an exact amount of money (either it is a big amount or a small amount) after an exact amount of time. Could be days, weeks, or months depending on your budget and activity. You don't wait for the price to fall or grow. When the time comes, you just do it regardless of market conditions.

Even after doing this, sometimes the market will not be in our favor and we will be at a loss. This is the key point to notice. In a situation like this, either you can sell if you are in profit or you will have to be patience and wait for that time to come. Controlling emotions and taking the right decision at the right time is the key. Don't hold onto something when you could clearly make good use of it at that time. Learn to let go when it is needed. You may be in profits even before you reach your target. In that situation, you need to take profit and start a new journey.

El Salvador/Microstrategy were not really doing DCA initially. I think Microstrategy doesn't care about that at all, and El Salvador only recently started applying DCA by buying 1 btc a day (if I remember correctly).
But generally speaking, the more frequent your regular purchases are, the better. I would set them as a minimum once a month.

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I don't like treating DCA like some sort of superior strategy. I believe timing the market (trying to buy low and sell high) yields better returns. Maybe some sort of hybrid strategy wouldn't be a bad idea.

I will not be comfortable as a person already used to DCA a fixed amount of money based on my income, and then my income increases considerably and then I keep investing that same small fixed amount because I do not want to change the amount. I will like to raise the amount I use. Things can also go the downwards like, maybe my income reduces considerably, and I can no longer continue to invest that amount of money which I saw as small, but now is big. I will not like to stop investing, It will be good for me to just reduce the amount I DCA. So maybe changing the amount to DCA with does not entirely defeat purpose of DCA, there are some times when the continuity in the habit will matter more than the change in amount.

You have pointed out a good point, because for those who have big chunks of money, why would they wait for next week or next month, whatever the time period they have chosen? While they can lump sum in buying BTC all at once, And in some cases, doing lump sum is better than doing DCA, like in the times of dump in the market. But those who don't have enough funds to take entry are only left with the option of doing DCA.

But according to my knowledge, DCA and lump sums are not that hard, as it is hard to keep them in your wallets. Because with big money and ownership comes big responsibility.

But I have seen big investors do DCA because they think accumulating BTC is all that matters, and they obviously have some funds for unexpected events like the dips. Because of dips, people can get their hands on more satoshi and then make more profits in the next bull run. But those who are doing DCA must have some good knowledge too. Because most people think that, they don't really need knowledge or a great sense of the market while doing DCA. And in my sight, that's wrong.

I am going to quote part of a post here because I think it adds value to the conversation and what you are actually looking for:


The answer has been given here that you can twist numbers and amounts and timing and time ranges as much as you want and then get the result you are looking for. If you want to find out that DCA would make you be worse off, just change your timings or a potential initial lump sum and there you go. But when you take a realistic example like the one provided by JayJuanGee, there is no tweaking in the parameters down the road. There is a starting date and an end date and it is impressive how DCAing did in fact outperform a lump sum.

This is because you have those peaks like in 2017 at just under 20k and then it goes down all the way to I think 3.5k and that is when your DCA approach really kicks in. You are buying Bitcoin all the way down in predefined intervals and you benefit from every single bit of the price drop until it reached the bottom. From there every buy you made/make gives you the full benefit of the bull run up to the almost 70k we had. A lump sum is like throwing a dart with a blindfold. It can be amazing, but a lump sump invested after the first bull run up to almost 20k would have probably killed you emotionally unless you really didn't need the money. Going down from 20k to 3.5k is very painful to watch. Doing so while investing with a DCA strategy lets you still sleep very well because you had a plan in place from the very start and lower prices means more Bitcoin. Hence price development does not only have one side of the coin, you always have something positive to look at.

If you regularly study the discussion on Buy the Dip and Hold (https://bitcointalk.org/index.php?topic=5132720.0), you will get more insight about the DCA strategy. Like the first comment corrected you, using the DCA strategy doesn't mean you should invest only a small amount over time. While using the strategy to invest in Bitcoin, your allocation could vary depending on what you want and how much you are capable to invest at once.

For someone else, they can decide to just keep investing a small amount every week or every month, but for another person, she or he can decide to invest a huge amount every week or month too. So, DCA doesn't compell you to only invest a fixed amount; it's a strategy that allows you to buy Bitcoin at different prices. For example, you might buy Bitcoin at $26k this week, and the next week you want to buy it, it might drop to $25,600, and so on (it could also increase).

DCA can be applied in two ways. The first way is your example, like when you already have a huge amount ($100k or more) to invest in Bitcoin but you don't want to invest it all at once. The second way is when you are working and receiving a salary, and you keep allocating some percentage of your salary to Bitcoin every month or week, depending on how you receive your salary. Your allocation every month could vary.

Well said mate, I also that the continuity is what really matter because DCA doesn't really have a specific fixed amount you are supposed to use but rather its about the continual and constant buying of small fraction of Bitcoin from your little earning because buying Bitcoin from your hard earn physical cash to save it what I think it's really the major reason of people actually doing it.

That's gambling!
DCA is dollar cost average, when you break this rule it stops being DCA and as I said is basically buying based on a hunch or your guts.

See how simple it is, it's x amount every week, every day every month, not x on monday maybe not this weekend, maybe z on Friday, then 6 months nothing then 10 times more, this is not a plan this is pure chaos.


This is completely different.
If you have averaged a buy of $100 a week for a year and then you get a pay rise and afford $200 it doesn't mean you're not DCA anymore, you can think of this like having two plans, one that started two years ago and one that started now.
If we would think like that basically nobody in countries with 100% inflation would be able to keep a DCA over the years, imagine somebody still buying bitcoin worth 10 Zimbabwe dollars when a loaf of bread went from 1 to a trillion.

If you want to be a purist then maybe. But DCA doesn't have any hard, legal definition. Modified DCA is still DCA, poorly executed DCA is still DCA. I don't think most of the investors who choose to follow the strategy would care about the payments and timing being 100% the same all the time. Small deviations won't do much harm. And to do it properly over a long time, you should account for inflation as well, meaning the amount of each purchase should be adjusted for the inflation rate.

You can always modify your DCA, I also believe what @pawel7777 stated.  I also think that when to execute the buying time is a crucial thing since I believe DCA is not meant only for a regular basis of buying but rather it is also used to average down our entry price.  

So buying during the lower lows is way much better than blindly following a weekly basis buy schedule since the price may get higher during our scheduled buy time. If that happens, it beats the purpose why we are doing this DCA thing.

I am a huge fan of the DCA method and would recommend it to anybody that is looking for ways to add crypto currencies to their portfolio. Finding the optimal time to buy and sell our coins is nearly impossible, it requires a lot of research and even then, we still need some luck to hit the exact bottom or top to make the best possible trade. Trying to chase these optimal timings can become frustrating and that is why I like the DCA method so much, we acknowledge the issue and look for an alternative approach. The traditional DCA method works great when you have a large amount of money that you are looking to invest in the next few months. In my situation it's a bit different, I don't have any large amounts of money to invest and can only save a part of my salary each month. In that case I relax the DCA requirements a bit and don’t buy a fixed amount each month. For anybody like me that has different amounts available each month I would also recommend to just buy the coins each month and don’t worry so much about the purchase price each time, on average it should be a good price.

You need to settle your buying pattern even if you are doing DCA. Buying more when price is high and less when price is down is of no use to me. Right now price is down and there is anticipation in the market that price will go up to 30k, so there is more benefit in DCAing right now then if price reaches 30k. There is no fix pattern for doing a DCA, you have to mix your own strategy about when to buy more.

I do not like the DCA method, because you are forced to buy at regular intervals and you cannot capitalize on the fluctuations in the price. I think it is better to buy low and to sell high.

I would much rather hoard when the price are high and buy when the price is low and then sell again and acquire more bitcoins when I use the increased profits from the coins that I sold at a high price.  8)

Despite being the best strategy that one can follow until the next bull run. There will be the pros and cons depending on the individual's situation. But for me, there's really no disadvantage on it because you're not obliged to invest a lot and you'll just do it religiously or when you're able.

The beauty of this strategy is that you're not pressured, you don't have a forceful plan that you need to fill it when you have or no money at all.

Stress free strategy but very effective.

To me DCA method is very nice especially the beginners because as a beginner investing on Bitcoin you could get overwhelmed and start investing aggressively without knowing you could run out of funds and as such making you to sell some of your investment to attend or sorts your needs but with DCA method your mindset of accumulating will change were as you will be guided on how to accumulate with a little funds but more consistent and plans for reserve funds or rather emergency funds that would take care of any needs that arise and keeps you consistently accumulating, so DCA may have other loopholes but is actually good for the beginners for risk management were as they feels more relaxed and rest of mind but it will take a long time to accumulate enough using DCA.

The DCA approach may be the bitcoin industry's best-kept secret. Ever pondered why so many individuals rush in, make huge investments, and then lose everything? Perhaps because certain factors favor it that way. When beginners lose, someone else profits.

By consistently investing with DCA, you're defying the unspoken "rules" set by the high and mighty of the finance realm. You're not their ideal client; you're too careful, too wise. Sure, it'll take time to build a significant stash, but isnt time on your side when you're not playing into their hands?

DCA is my favorite strategy. And it has proven to be effective with the long-term investment targets that I am planning.

Although there are market discrepancies when using DCA, in my opinion DCA is only effective in the spot market with long-term goals and when the market is bearish like this year. And DCA is not suitable for the futures market, especially with a double model for each open position, for example the first order position is to buy long BTC at a price of 29,500 with funds of $100, then the second order position is 28,300 with $200 and so on, if BTC experiences a flash dump then the risk of being hit by Margin Call will be very high. And in the futures market, there are many liquidity hunters, perhaps if we use funds that ignore Money Management, we will be subject to Margin calls even though we use the DCA system.
That's just my thoughts.

DCA is simple to understand; we know that it is already used by most people here in the crypto space. Do it when you have a purchase of Bitcoin or altcoins that you can use to provide good savings in the future. The others do it with a fixed amount, or they base it on a percentage, and then they deduct that from their salary.

So it also depends on you, and the best thing to do so that you don't have a hard time with DCA is that when you have the opportunity to buy, you should buy there, but hopefully not for a long time, as long as you have extra money every week. you used to save.

Falling with your car down a cliff is still driving since the engine is still running and you're still at the wheel! The thing is pretty simple, once you cut the "average" word out of it, it stops being dollar cost average, just as ice cream without ice is no longer ice cream is at best just cream!
So if you buy based on guts and instincts random sums at random intervals it's either RDC or GRT or PNGYSHYT but for sure not DCA.

The whole point of this strategy is to keep risks of high volatility at a minimum and to spread the investment sums, If you do it randomly why would you even call it DCA and lie to yourself you doing some strategy?


How do you know which are the lower lows?
Imagine somebody who has believed in the 40k then 35k then 29k it's the lowest Bitcoin could drop and bought all in and now he's looking on the side with all the money spent waiting for the pump!
Do you know what that was? Gambling, putting his money on the table on a hunch!

Yeah, that's what I thought it was like. I think the point is not to get a better deal than when spending a big sum at once, but to avoid thinking about when's the right moment to buy. So a person chooses something more or less fixed in terms of amounts and dates, and just keeps going without worrying whether it's a good or a bad moment, whether it's better to wait or to risk it. This way you have a routine, and it doesn't require overthinking the process or doing any research. It successfully helps accumulate Bitcoin without all that.

I don't understand, why are you saying that the investment amounts are smaller or equal over time? They can also become bigger: oftentimes people who chooses this strategy is because they have limited amount of money available, let's think about an employee for example, so every month after he gets his salary he has new money available. But if he gets promoted then that investment could also go up of course if he doesn't change his lifestyle.

Plot twist:
After your first purchase bitcoin goes from 20 to 25k and your friend who bought a lump sum has 25% profit (5k), while you have 20% of that.

I'd call DCA is a good strategy when you have constant inflow of money, but no savings, or you don't want to touch those savings for whatever reason.
So, you earn 1k a month and want to spend $100 every time you get your paycheck on buying bitcoin. That's great!
If you have 20k in the bank just sitting there and earn 1k on top of it every month, don't DCA, just allocate 10% of your savings or whatever you feel comfortable with.

But there's no cutting out the "average" at all. You will still have an average price even if the purchase amounts or timing are not 100% consistent.
I don't think the sky will fall if one month you buy for $99 instead of $100 or buy on the 2nd instead of on the 1st of the month. I see it more of a spectrum than a binary thing.
Every strategy can be tweaked or modified. It's not like you either have 100% adherence or complete randomness.

We're not talking here about buying $99 instead of $100 or the next day because your internet was off.
Let's start again from my first post in this to which you replied:


The user to whom I replied mentioned clearly that you can "fine tune " it by buying based on market trends.
No way, there is little no way in hell you can say this is still DCA when you buy guessing on what might be next!

Changing your dates from one week to a month or a day, and changing the sum from 100 to 200 for the next month, it can still be called DCA.
But buying for $100 for two weeks then two days later throwing $1000 on a whim and then not buying for 6 months cause you think it will go down is everything BUT DCA!
How can you even have an average here?

The exact amount that is big to you might be small to me, it depends on the person that wants to DCA, plans are different, the salaries of everyone on here are also different, you can be able to afford using $500 for weekly DCA into Bitcoin and I might be able to afford $3000 every week to DCA every week, our results will never be the same.

Either it's weekly or monthly, price actions of Bitcoin will also not stays the same, but honestly, it's just an unnessecery discussion, DCA is DCA, evwnry one knows their capacity, and how long they want to DCA for, to me it will work eventually no matter what strategy you use to accumulate your Bitcoin.

The only difference will be amount, how much you are able to DCA into Bitcoin on the long run is what will determine what you will real when the bull market is here, some investors have no fixed price, this week it could be $200 and next week it could be $400, it doesn't matter, but your commitment will bring you the best results in the end.

Regardless of how the market moves and whatever its price at the moment, DCA is still encouraged since the whole point of it is to mitigate risks by buying at different prices, as long as your goal is to hold them for longer term by not panicking whenever a current price dump occurs. That is to lower the risk from market volatility, and to increase your chances of making you profitable when you decide to sell them at a very reasonable price.