From $10 to $10,000: Dollar-Cost Averaging in Crypto

Summary

Dollar-cost averaging (DCA) is an investment strategy where a fixed amount is invested in an asset at regular intervals, regardless of price. This approach reduces the risk of buying at the wrong time, provides a psychological buffer against market swings, and automates decision-making. DCA is popular in crypto due to round-the-clock trading and high volatility, making market timing difficult. Setting up DCA is simple, and it fits well for those investing from regular income. A real-world example is El Salvador, which accumulated Bitcoin daily to build substantial reserves and profits through disciplined buying. While DCA offers consistent exposure and behavioral benefits, it has drawbacks—lump-sum investing usually outperforms in rising markets, and frequent small purchases can increase fees and operational risks. DCA is most suitable for those seeking a steady, habitual investment routine rather than aggressive, high-risk strategies. To use DCA effectively, automate investments at a sustainable level, check for fees, and follow a clear plan for asset custody and profit-taking. Always be aware of personal risk tolerance and do additional research before investing.

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