Long-term DCA and drawdowns: how do you evaluate a strategy beyond returns?

[tygeade]

being a wonderful method of accumulating Bitcoin and suitable for all market conditions. Like you rightly noted, it is convenient for anyone to apply and it makes for growth in general since there is no panic whatsoever because the investor is not anxious to sell. I know one thing for sure which is that we are in the best time to buy and not to panic. When investors are done with buying gold and the surge is no longer there, Bitcoin will be the next, I'm sure of this. Those that will buy now will be able to see their portfolio in fat profits and very fast too.

There are millions of different opinions when it comes to DCA. Op just has one of those different opinions and after going through few other posts here, I see that not everyone is a fan of DCA. I don't know the exact reason, but what I can sense is they lack patience as they are not ready to wait for a couple of months or years before they can start booking profits. For me, DCA is one of the best strategies to eradicate risks and make long term profits because it makes me set a clear goal and also helps me in a strict budgeting. I would avoid pouring excessive funds while DCAing. This makes it one of my favourites.

Even in a situation where people are pouring their investments into gold and making withdrawals from their bitcoin portfolios, I think we can still set a clear goal and continue with our DCA strategies because eventually, they will start giving us profits after a couple of months. DCA is only for long term holders who have the ability to be patient. Rest, all will always have.

[terrific]

That's a good point but it really sets the meaning on who's doing it. Whether there's condition or a fixed date when doing DCA.
You can only determine it on your own if that's no longer DCA itself.
But in that point of view, what matters is still that the person is doing all the DCA and the main plan of having more Bitcoin or any crypto they prefer.

The intent (accumulation) can stay the same, but once conditions are added, the risk and edge no longer come from averaging, they come from regime selection. At that point it’s an execution framework, not a strategy in itself.

But I think that the goal remains the same and that's to have more in the end.
And that's a point that which I think is still going to be a good one depending on how you're looking at how you do it.
The risk remains the same and those conditions are met by doing so yet, the goal has never changed.

[AYOBA]

I agree with the long-term thesis — if Bitcoin continues to make new ATHs over multiple cycles, DCA will eventually work out in terms of price.

My point isn’t that DCA is unprofitable, but that profitability alone doesn’t fully describe the experience of holding through the process.

Since when the DCA method was introduced everyone prefers to use it when it comes to investing in the Bitcoin. And if to say that isn’t that unprofitable I don’t think that people will still using the DCA method, especially those that don’t have enough money to invest in the Bitcoin; but with the DCA Approach they where able to get what they want from Bitcoin investment.

So for me, the question isn’t “does DCA work if Bitcoin goes up long term?”, but rather:
how do you personally evaluate whether the strategy is still worth sticking with during those long, uncomfortable periods before the next ATH arrives?

Yes off course with the DCA method doesn’t matter how the Bitcoin price goes its works all the time and also fell comfortably, accept you don’t have choice to use it. Because if a person is able to accumulate the Bitcoin with the DCA strategy, it brings huge profits when in the future.

[Cgrexp]

I agree with the long-term thesis — if Bitcoin continues to make new ATHs over multiple cycles, DCA will eventually work out in terms of price.

My point isn’t that DCA is unprofitable, but that profitability alone doesn’t fully describe the experience of holding through the process.

Since when the DCA method was introduced everyone prefers to use it when it comes to investing in the Bitcoin. And if to say that isn’t that unprofitable I don’t think that people will still using the DCA method, especially those that don’t have enough money to invest in the Bitcoin; but with the DCA Approach they where able to get what they want from Bitcoin investment.

So for me, the question isn’t “does DCA work if Bitcoin goes up long term?”, but rather:
how do you personally evaluate whether the strategy is still worth sticking with during those long, uncomfortable periods before the next ATH arrives?

Yes off course with the DCA method doesn’t matter how the Bitcoin price goes its works all the time and also fell comfortably, accept you don’t have choice to use it. Because if a person is able to accumulate the Bitcoin with the DCA strategy, it brings huge profits when in the future.

DCA (Dollar-Cost Averaging) is a strategy for holding Bitcoin in the long term. It is difficult for anyone to predict how long it will take for the Bitcoin market to decline or recover. Therefore, investors need to protect their financial balance and cash flow management. Long-term investors are usually not overly concerned about temporary losses in holdings, and are able to continue investing patiently, even during long price corrections. It is important to set investments at a personal comfort level, so as not to be tempted to hold BTC and maintain the right strategy.

[Creeper0]

DCA is suitable for long-term investment, for short-term investors DCA may fail to provide good output, and may even face losses. Short-term investment is always risky, but in DCA, the risk is higher.

When doing DCA, it is not a matter of concern whether you buy during the decline or during the ATH, when you calculate after one or two cycles, you can also profit from the Bitcoin bought during the ATH. If you look at last year and look at today, you will understand the difference. Where last year the price of ATH was $70k-$80k, this year we are using that price as the dip. Today we are using $126k as the ATH, maybe this ATH will be considered as the dip in the upcoming cycle. The most important thing to discuss in DCA is to be consistent, be patient and have the ability to hold on.

[SeriouslyGiveaway]

DCA is suitable for long-term investment, for short-term investors DCA may fail to provide good output, and may even face losses. Short-term investment is always risky, but in DCA, the risk is higher.

Investors are actually going long term with their investments as a long term holding is like a mandate. People who buy bitcoin, want to have short term profit, and don't plan to hold bitcoin a long time, they're not actual investors but I'd prefer to consider them as speculators. They are not like investors at all, as they don't focus on value of Bitcoin, and their focus is on Bitcoin price, and they want to see price rises in short term for profit.

Whether Bitcoin has value or not, how its value will grow more in the future, and which fundamentals can help Bitcoin achieving these things are all not important with speculators while with actual investors, such fundamentals are super important for their investment decisions.

[aylabadia05]

So for me, the question isn’t “does DCA work if Bitcoin goes up long term?”, but rather:
how do you personally evaluate whether the strategy is still worth sticking with during those long, uncomfortable periods before the next ATH arrives?

For my purposes, it's still feasible. It's feasible for investors with a minimal budget allocated for Bitcoin investment. They can utilize the spot market to buy as much as they can since Bitcoin's price is far from its all-time high.
For investors with substantial financial resources who can afford to buy whole Bitcoins between 1 BTV and above, they only expect a small percentage but a short-term profit, without having to hold for years.

[Abu-Naim]

For those here who have used DCA or similar long-term approaches:
what do you personally look at to judge whether a strategy is still working
and worth sticking with?

Should there be some reasons why the DCA method will failed?

I think only people who aren’t ready to accumulate Bitcoin are complaining about the DCA method simply because they want quick return, therefore, they always look at market price and aim for quick profit always which usually fails because the market is versatile anything can happen, only people that are patient enough do benefit from the DCA method.

If you have started investing in Bitcoin using the DCA method for at least two years now, I am very sure you would have been in profit now because the price has moved even though the price has dropped again below expectations, but there is a high probability that the price will hit its all time high anytime soon.

[icebar]

For those here who have used DCA or similar long-term approaches:
what do you personally look at to judge whether a strategy is still working
and worth sticking with?

In Bitcoin, long-term investment is the most valuable. Those who have been investing in Bitcoin through DCA for the past few years have definitely been able to build a large portfolio. But those who are investing for short-term gains are facing losses. Those who bought Bitcoin when the Bitcoin price reached its highest level a few days ago, if they were not long-term holders, they could not hold their Bitcoin. They have lost money by investing for profit because they panicked and sold their Bitcoin. But those who have long-term plans have invested in Bitcoin regularly and even if they have losses now, it will be recovered in the future and naturally they will benefit a lot.

[EarnOnVictor]

In practice, the harder questions tend to be things like:
- how deep drawdowns get during adverse periods
- how long the portfolio stays below previous all-time highs
- how much capital remains undeployed while waiting for better conditions


For those here who have used DCA or similar long-term approaches:
what do you personally look at to judge whether a strategy is still working
and worth sticking with?

I had to retain these paragraphs among what you wrote because my conclusion about the whole body is that you mixed things up. Are you talking about the viability of HODLing for cycles, or how best to enter into the market, which DCA is an example, or both?

Well, let me explain the best way I can put the two together. When starting investing afresh, the DCA strategy is one of the best approaches, but the term "best", to me, depends on the situation. I can't see Bitcoin at the peak and be using DCA as some people preach. I must DCA only when I know that it will be worth it. Again, different strategies for different approaches, and judging by the current situation, I can start DCAing around $60,000-$55,000. Do you know why? The fall can't be much again. Although, buying at once at a very good dip is my best approach. But to avoid missing out, I could still use DCA.

However, about HODLIng, my experience has taught me not to be a blind investor. It's better to buy your BTC for sometime and liquidate it when the 4-year cycle is calling the bearish season.

[BlackBoss_]

Well, let me explain the best way I can put the two together. When starting investing afresh, the DCA strategy is one of the best approaches, but the term "best", to me, depends on the situation. I can't see Bitcoin at the peak and be using DCA as some people preach. I must DCA only when I know that it will be worth it. Again, different strategies for different approaches, and judging by the current situation, I can start DCAing around $60,000-$55,000. Do you know why? The fall can't be much again. Although, buying at once at a very good dip is my best approach. But to avoid missing out, I could still use DCA.

It is about using lump sump mixed with DCA strategy and that's good but only good if you are experienced in this market with your investment in the past years.

With newbies in this market, they should only use DCA strategy and buy bitcoin with their own schedules like weekly, bi-weekly, monthly, bi-monthly or quarterly. How often do they make their DCA purchases is their personal choices that depend on their available finance, discretionary income for investments.

Newbies can not wait for dips and buy bitcoin like you because if they do that, they will easily feel panic with market dips and don't buy dips. DCA strategy basically is for no hesitation when buying bitcoin with no need of finding best prices or waiting for dips.