Is DCA for Bitcoin Worth It?
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I’m new to this sub, but I have been investing in Bitcoin for a while. One thing I’ve been hearing about more and more is that DCA is the preferred method for investing. My question is – why are people DCA Bitcoin rather than purchasing Bitcoin with a lump sum? Should I be using DCA for my own investments?
Let me explain my concerns with DCA. The appeal of DCA seems to stem from reduced volatility. In other words, if you buy Bitcoin with a lump sum, it’s price could crash at any moment, causing stress and panic, particularly if you need the money for payments. However, for a lot of people (including myself) who invest in Bitcoin for the long term with extra money, the short-term volatility isn’t a critical concern.
In fact, based on a quick Google search, I found that DCA consistently leads to reduced long term gains compared with lump sum purchases. Some examples articles include:
* [https://www.nasdaq.com/articles/dca-isnt-as-effective-as-going-all-in-on-bitcoin-2021-09-12](https://www.nasdaq.com/articles/dca-isnt-as-effective-as-going-all-in-on-bitcoin-2021-09-12)
* [https://www.newsbtc.com/news/lump-sum-bitcoin-investors-makes-more-profits-than-dca/](https://www.newsbtc.com/news/lump-sum-bitcoin-investors-makes-more-profits-than-dca/)
And there are countless others. This makes sense because if you believe Bitcoin will increase in value in the long-term, then the earlier you get in, the better.
I completely understand why DCA is more effective if you need your invested Bitcoin for payments or from a company’s perspective when they need to present their holdings to shareholders. But for an individual long-term investor, who is investing in Bitcoin with extra money, I don’t see the appeal based on studies that have compared DCA with lump sum purchases. Of course, my research on this comparison is extremely cursory.
TL;DR I’m genuinely trying to understand why a long-term individual investor, who doesn’t need the invested Bitcoin for immediate payments, would logically choose DCA over lump sum purchases, given the fact that lump sums lead to higher long-term gains.
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