What is Dollar Cost Averaging (DCA)?

Dollar Cost Averaging (DCA) is a commonly used strategy where you purchase the asset by a set amount over regular intervals, for example, where you invest $10 every week. This strategy helps you reduce risk by enabling you to purchase more when prices are lower and less when prices are higher. DCA does not guarantee profit but, over time, may help even out the price fluctuations.

Recurring buy of a set amount helps you take advantage of this strategy by providing the option to automatically purchase cryptocurrency on weekly, fortnightly or monthly schedules.

Example: Buying Bitcoin with no DCA in a down-trending market

Paul decides to purchase $2,500 worth of Bitcoin on December 28th, 2017. The Bitcoin price at the time was $21,353 per coin, which means that Paul now owns 0.1171 BTC.

Example: Buying Bitcoin with DCA in a down-trending market

Julia decides she wants to purchase $2,500 worth of Bitcoin on December 28th, 2017. However, instead of investing the entire amount today, she decides to purchase $250 every month, for 10 months. 10 months later, Julia owns 0.2248 BTC. That’s almost twice as much as Paul, even though both invested the same amount.

Example: Buying Bitcoin with no DCA in an upward trending market

Paul decides to purchase $2,500 worth of Bitcoin on April 20th, 2020. The Bitcoin price at the time was $11,238 per coin, which means that Paul now owns 0.2225 BTC.

Example: Buying Bitcoin with DCA in an upward trending market

Julia decides she wants to purchase $2,500 worth of Bitcoin on April 20th, 2020. However, instead of investing the entire amount today, she decides to purchase $250 every month, for 10 months. 10 months later, Julia owns 0.148 BTC. That’s almost less than half of what Paul owns, even though both invested the same amount.