Any one vested in the crypto space will surely have heard of Dollar Cost Averaging (DCA), a tried-and-tested way to remove all emotions from investing, put money regularly into the market and clock time in the market. But exactly how DCA is done isn’t immediately apparent maybe because it’s something so integral to investing that people don’t bother to write about it. I posted something related to DCA on r/cryptocurrency recently and found out more about people’s DCA habits.
Dollar Cost Averaging. Our beloved mantra here. One of the rare things most of us come to a consensus on, regardless of our backgrounds and portfolios. This sub is enlivened by supportive Redditors declaring their intention to DCA and encouraging others to do likewise.
There are different forms of DCA though. Most people set up a recurring buy function. They allocate a certain percentage of their salary to buying crypto, so when their pay day comes, this amount gets automatically transferred to Bitwage or COINBASE so that it can be redeemed for crypto. Others employ a dynamic DCA strategy, which involves buying more when the BTC price dips below certain logarithmic lines and selling it incrementally when it’s above.
What’s your DCA routine and how has it evolved over time?
And here are some common DCA strategies:
1) Buy daily. Look at BTC and ETH and buy the one that has performed worse during the last 24 hours as he likes to be in control of his purchases. Another user spends $20 every day on CRYPTO.COM to get his daily reward of six diamonds.
2) DCA weekly into BTC, ETH and selected altcoins. The alt coin that has dropped the most over the last week gets to be DCA-ed. Some people even go as far to designate Monday as their DCA day. One user divides his designated sum of money over the number of Mondays in a month and then proceeds to buy his crypto manually every week. He finds that buying manually yields him better rates than automatic features from platforms like Binance. Other people prefer to automate the process and not look at the charts
3) DCA twice a month, once on the 1st and another on the 15th. The second DCA is done with money saved for the user spending less than he budgets for the month
4) Wait until the end of the month and look at what’s left over to DCA. Expenses are to be paid first from the fiat mining account.
5) DCA every payday as soon as the money hits your account
6) If portfolio is red —> DCA with money from salary + money accumulated in warchest or treasury, depending on how you like to call it. If portfolio is green —> DCA 50% of salary but put the remaining 50% in the warchest.
What’s your style?
