DOLLAR-COST AVERAGING (DCA)
Overview
Invest a fixed dollar amount into crypto on a regular schedule (weekly or monthly), regardless of price. This removes the need to time the market and smooths out your average purchase price over time.
Setup
- 1.Decide your total monthly/weekly crypto budget (e.g., $200/month)
- 2.Choose your target assets (e.g., 60% BTC, 40% ETH)
- 3.Set up recurring purchases on your exchange (Coinbase, Kraken, etc. all support this)
- 4.Define a minimum time commitment (12-36 months minimum to see the full effect)
- 5.Optionally, increase purchase amount during significant market dips (modified DCA)
- 6.Review and rebalance allocation every 6-12 months
Max profit
Unbounded — your average cost basis will be lower than peaks, potentially much lower than any single lump-sum purchase
Max loss
100% of invested capital if assets go to zero, but losses are spread across time
Breakeven
Weighted average cost basis across all purchases
When to use
For investors who believe in crypto long-term but don't want to (or can't) time the market. Especially effective when starting investing or when receiving regular income you want to deploy systematically.
When to avoid
In extremely overbought markets where you have high conviction prices are near cycle tops. When transaction fees are high relative to purchase size (keep fees under 1% of purchase amount).