Dollar Cost Averaging (DCA) is an investment technique where you buy a fixed dollar amount of an asset at regular intervals. It is particularly effective when dealing with more volatile assets such as Bitcoin.
Let’s think of a scenario where at the start of this year (2018) you decided to buy $900 worth of Bitcoin. You could either have bought it in one lump sum on January 1st, or you could spread out the $900 by buying $75 worth of Bitcoin each week over 12 weeks.
In which scenario would you end up with more Bitcoin?
In Scenario 1, where you buy $900 worth of Bitcoin in one lump sum you would have ended up with 0.046 Bitcoin based on its market price on January 1st which was 19457.16 NZD.
In Scenario 2, where you spread out the $900 over 12 weeks starting from January 1st, you would have ended up with 0.060 Bitcoin based on the market price every 7 days until the 17th of March.
This is a difference of 0.014 BTC or a 23% difference in favor of Dollar Cost Averaging.
Dollar Cost Averaging is not only more effective but easier to adopt compared with lump sum investing as you don’t need a large amount to get started. You can start from as little as $20 a month.
At MyBitcoinSaver we facilitate a Dollar Cost Average strategy through automatic bank payments.You just need to set up an automatic payment from your online bank account with an amount and frequency of your choosing and we do the rest. We buy Bitcoin each week and send it straight to your Bitcoin wallet.
This means you are always in control of both your Bitcoin and your bank payments.
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