Unpopular Opinion: Dollar Cost Averaging is a Bad Strategy

TLDR: Today, individual investors have an advantage over institutions in that they can invest in bitcoin at any point. After each passing day, more institutions gain the approval to buy bitcoin when they were once unable to. Therefore, by delaying investment into BTC thru dollar cost averaging, one is giving up a great opportunity to get in early.

Dollar cost averaging has one great benefit; it gives investors psychological comfort. By spanning out purchases of BTC over time, you're either buying into a profitable position, or buying at a discount compared to your first purchase—both options sound good. However, DCAing is not a good strategy in today's environment, where practically every institution is trying to get their hands on bitcoin as quickly as possible.

If you had started DCAing in October 2020, when Bitcoin was trading at $12,000, it may have appeared to be a good strategy at first, as the price briefly dipped into the 10,000's. However, prolonging out the investments by too long would leave you missing out on huge profits as institutions came into play, and BTC rocketed past $20,000. Today, you would be still DCAing into BTC at ~$48,000 when you could have invested it all at $12,000.

In all fairness, Dollar Cost Averaging is a prudent strategy that encourages people to stick to a plan—for that, it is a great move. However, it's important to realize that individual investors have an advantage over institutions today because there is nothing preventing them from buying bitcoin. As more institutions gain approval to add BTC to their portfolios/balance sheets, individuals will lose the advantage.

My advice, come up with the maximum amount of money you would be comfortable investing in BTC (small enough that you will sleep well at night) and put it all in today.

submitted by /u/mulebotte
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