DCA can protect you from the bear market. Instead of investing large sums all at once you average out the moeny that you invest and it protects against the extreme volatility that a bear market can bring. If you invested 50000 at $30000 you would be down now a huge amount but if you invested 50000 over the time it was gaining to $30000 then you would not be feeling the losses as much and it would probably stop you from panic selling. I wish more newcomers to btc would learn about dca because it protects them from panic selling which can hurt the market for longer.
Using DCA probably means you will not get the extreme profits you would if you invested 50000 and then the market went on a bull run but it does not matter because you still will profit a lot. There is no shame in DCA I did not do it at 1st but since I invested a large amount I have been using the dca strategy every month. I find it helps me not worry about the short term volatility that happens and when it starts increasing I know I have a large investment which will show some very good profits. I think it is 1 of the problems with newcomers they buy into btc with a lump sum and then they expect fireworks but when they do not get those fireworks they sell at a loss and never return to btc. That is a loss to the community and hurts the market so we should be encouraging dca as a way of stopping people panic selling.
Surely there is some discretion in terms of any kind of an investment approach that any of us might take, and we will have to live with the consequences of our choices, especially if we do something that involves a lump sum investment and expecting that we had been buying at the bottom after a 50% dip in BTC prices.
Accordingly what you did was not unreasonable, but there are ways that you could have managed your risk a bit better - and sure it is easy to criticize after the fact and/or to attempt to Monday morning quarter back, but surely these kinds of situations can serve as learning possibilities for others.
Let me mix up your hypothetical a bit, an let me suggest that someone had around $50k to invest, and s/he had been saving and building up that investment for around 10 years; however, currently s/he has a higher income so s/he is able to invest around $10k per year into bitcoin or into anything else... so that is right around $200 per week... So, if we account for cashflow and we account for the fact that there is a lump sum that we want to move into bitcoin, we could just put the whole $50k into bitcoin and then DCA with the future cashflow, or we could be a bit more conservative with our $50k lump sum and to consider our $50k in three categories, 1) the DCA portion, 2) the buying on dips portion and 3) the lump sum right away portion.
Part of your likely problem was that you decided to put 100% into the third category rather than considering the other two categories, and like I mentioned that is not a completely wrong perspective because any of us could look at charts and we could see that a 50% dip seems pretty damned decent, even if the price was around $35k at the time... A default and no thinking approach would have been to have divided the three into equal categories of 1/3 into each category, but that 1/3 in each category would have had seemed too whimpy both in terms of how much the BTC price had already dropped and the fact that you (or the hypothetical person) was still having $200 per week coming in that could be invested into BTC. .and the new money can also be lumped into all three categories of DCA, buying on dip and lump sum too, but usually regular cashflow would mostly fall into DCA and/or Buying on dip, but if you (or the hypothetical person) were to get an extra bonus amount of cash of maybe $6k or something like that, then there could be some considerations about how to treat that extra bonus amount of cash and how much to allocate to each of the three categories.
The mere fact that any of us might consider our accumulation of bitcoin within those three categories does not completely remove us from various individualized specifics in regards to choosing how we want to apply the categories... DCA has a time component that could be anywhere between the creation of a time frame or even to have an indefinite plan (that might just have criteria such as "until I reach entry-level fuck you status" or until I am within 50% of entry-level fuck you status).
The buying on dips might not be straight-forward either because in early 2022, any of us might have reasonably concluded that it was not very likely that BTC prices would drop below $22k, which was the then 200-week moving average, and now we can see that setting bottoms like that might not have played out as well in the real world as it was supposed to play out in the speculation/theoretical world.
Anyhow, I am not sure if it is helpful for me to say very much more at this particular time beyond merely highlighting the fact that many of us might consider that the whole matter of investing into bitcoin is easy so long as we are able to get in at or somewhere near the bottom, and even if it might take a while for the BTC price to go up and to cause our investment to be sufficiently profitable, such an "easier" solution might not end up working out, and perhaps it is more work to have to consider the various possible negative scenarios after the negative scenarios started to play out rather than engaging in a bit more work in the beginning to already have some worser case scenario plan in place, and even if we still might need to tweak our worser case scenario plan when it ends up playing out MOAR worser than we speculated that could be even possible, but at least we would already have some kind of framework in place for preparing ourselves financially and psychologically for BTC prices to go in either direction.. even if we might have pretty strong conviction that the bottom may have already been in and then we end up being wrong.
@jjg...I have read your "dissertation" with interest.
hahahahaha
You say that with such a love and hate mixed therein.
No problem.
Unfortunately, not much to add...price per is on the money, but cannot divulge the volume of buys.
I got my numbers from the numbers you gave me.
You can suggest that your profit level might have had been 150% greater than the DCA scenario that I gave you, and you could even proclaim that your actual cost per BTC is about half of my cost per BTC, but if it ends up that you could have accumulated 2-3 times more BTC than you did, merely because you ended up being less assertive/aggressive and more whimpy, then it might not help you so much to have higher percentages in terms of bang for your buck and or that your cost of BTC was half.. if we might be talking about the potential of having 150 BTC rather than 45 BTC, or if we go back to the other scenario of having 60 BTC rather than having 20BTC.
Sure, I could outline that a bit more for you, but I think that more or less you should be getting the point, even though you don't seem to like the idea that someone who might have targeted buying 100 BTC, and then that same person ends up with 130 BTC has more flexibility in terms of managing his/her wealth in terms of having 30 extra BTC that can be sold at anytime, whether the BTC price is $10k or $60k, some value between that or some other value. We could even paint a scenario in which someone might have ended up buying 130 BTC in the around the $400 range but then made mistakes and then ended up having BTC that had costs of around $1k per BTC, and that person had sold various BTC along the way, and maybe such person still ONLY has 110 BTC, but that person had never really considered it very likely that BTC prices would go above $10k, so the better case scenario was figuring a set of circumstances in which BTC might be sold between 5x and 10x profits (again presuming mistakes were made and the average cost per BTC is around $1k), so the BTC price performances that are above $10k and even seeming to want to go higher are all icing on the cake and given quite a bit of flexibility... even if we might have to concede that fuck you status had to get doubled because of revelations of inflation (debasement of the dollar) - especially since March 2020 and soon thereafter.
I hate to spend btc, so it would probably become somewhat of a conundrum later.
Well, you already know my diagnosis for fear of spending and/or feelings of dilemma regarding spending...and I doubt that it is too late to overstock now, as compared to in 2015/2016.. just that the numbers are different, but the dynamics of overstocking are not different... so for example if you have a relatively whimpy (from my perspective) target of less than 5% in BTC, and you end up over-allocating to 6% or 7%, that could give you a lot of flexibility at a later date, even if it did not really cost you too much on an earlier date, relatively speaking.. Sure, there are some risks to overallocating, but when the BTC price is at historical lows, and if you believe that it is reasonable to conclude that bitcoin retains a pretty strong investment thesis relative to other possible investments, then I would think that there could be some rational reasons to conclude that overallocating could be part (if not all) of the solution even though some folks might consider overallocating to be gambling...and I am not completely opposed to those kinds of assessment that each of us has to be careful in regards to gambling too much with assets in our investment portfolio, whether BTC or other allocation decisions that we make.
Sometimes, I dream of a directed charity (as I posted before), other times maybe about a bequest to the extended family and/or a combination of both.
Unfortunately, my own children have shown to be incapable of having extra money so far: I made a limited 'experiment' with some stock donation with basically unsatisfactory results.
10% ..puff, gone (converted to cash, spent and just given to friends), in less than a year (maybe even 6 mo), with nothing valuable acquired as a result of that spending.
I guess, this is my fault as a parent and I will need to think about how to proceed further.
You are likely not the ONLY one with such a dilemma.. and probably there could be ways to try to work on these kinds of relationships while you still have abilities to try to structure such things... like for example, if you create some kind of business or a trust in which there are targets for the money, so the next of kin could help you to manage such donations and if they are able to get better at it, then they would likely be able to inherit the principle once you pass... but yeah, if they are not really cooperating, then you might need to create such structure on your own, and maybe get non-family to help you with it, and as it might get more established in terms of whatever donation target that you are aiming at, then maybe you try to make it continue once you pass and if your family remain not ready, unwilling or unable to participate then maybe they end up not being able to receive as much of your hard work, once you pass...
I am not going to claim to have answers for these kinds of dilemmas, but largely to brainstorm in terms of some of my own experiences and considerations on related topics..
Poll
