DCA Effective Going All In On Bitcoin

It is fashionable in bitcoin circles these days to join the DCA army: to dollar-cost average your savings into bitcoin. If you put away a little bit at a time, even trifling amounts like $1, $5, or $10 a day, you can grow your stash into very impressive fortunes. It makes for a smoother journey, and it overcomes the psychological barrier of buying at (what until two minutes ago seemed like) very high prices.

DCAing is an investment strategy that bitcoiners inherited from the world of traditional finance – and it’s completely wrong.

First, let me give some caveats: I adore Hass McCook; his articles, particularly those on energy use, are amazing. I don’t dispute his conclusion that a DCA army would be good for the bitcoin network’s price stability and for moving sats into strong hands. Most people don’t have the guts to stomach the risk of buying a top with everything they’ve got. And for even more of us the psychological commitment device of repeating a small thing every single day turns terrifying saving decisions into routine habits.

But as an investment thesis on top of a structurally upward-moving asset, it makes little sense. Most people have heard the investment quips of people like Warren Buffet or Ken Fisher saying that “time in the market beats timing the market;” DCAing a current stash of dollar savings into bitcoin over a certain time period intentionally delays your time in the market in exchange for avoiding the prospect of horrifically mistiming the market.

Source link Bitcoin Magazine

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