For those that don't know what Dollar Cost Averaging is, DCA is an investment technique where you buy a fixed dollar amount of an asset at regular intervals. It is particularly effective when dealing with more volatile assets such as Bitcoin.
Let’s think of a scenario where at the start of this year (2018) you decided to buy $900 worth of Bitcoin. You could either have bought it in one lump sum on January 1st, or you could spread out the $900 by buying $75 worth of Bitcoin each week over 12 weeks.
This is a difference of 0.014 BTC or a 23% difference in favor of Dollar Cost Averaging.
Let’s think of a scenario where at the start of this year (2018) you decided to buy $900 worth of Bitcoin. You could either have bought it in one lump sum on January 1st, or you could spread out the $900 by buying $75 worth of Bitcoin each week over 12 weeks.
This is a difference of 0.014 BTC or a 23% difference in favor of Dollar Cost Averaging.
Do the scenario for January 1st 2017 or November 1st 2017 as a start date and tell me how good that Dollar Cost Averaging technique is ...
If the prices go down during those 12 weeks, of course, it's better as you're buying at lower and lower prices, but if the prices go up you end up with fewer coins bought.
So, it's not about the technique it's more about predicting the market. Which nobody can...
Absolutely spot on! Well said....
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