Simple investment strategy: regular investment in Bitcoin/BTC (Dollar Cost Averaging)

That day, I came across a post on LinkedIn: A person consistently purchased $30 worth of Bitcoin every day for 8 years. This strategy has a professional term called “Dollar Cost Averaging” (DCA). What was the outcome? A total investment of $86,370, now worth a staggering $1 million in Bitcoin.

This guy bought $30 worth of BTC a day for 8 years. This is sometimes known as dollar cost averaging. The net result? $86,370 now worth $1M in Bitcoin.

invest-on-btc Simple investment strategy: regular investment in Bitcoin/BTC (Dollar Cost Averaging)

Dollar cost averaging Bitcoin leads to wealth

If you don’t know much about investing, you can choose the simplest strategy: dollar-cost averaging into Bitcoin. There’s no need to take risks with other more complex or volatile cryptocurrencies, not even Ethereum (ETH), which has certain risks after transitioning to the Proof of Stake (PoS) consensus algorithm. As the first and most widely recognized cryptocurrency, Bitcoin’s probability of going to zero is now extremely low.

Why Does Dollar Cost Averaging Work?

The key to dollar cost averaging is avoiding the impact of market emotions. Whether in a bull or bear market, you consistently invest the same amount to buy the asset. This method helps investors acquire more shares when prices are low and fewer shares when prices are high, smoothing the overall cost over time and avoiding the risk of lump-sum investments. Bitcoin’s scarcity (with a fixed total supply of 21 million) and its positioning as “digital gold” also make it highly likely for long-term holders to see gains.

Some might argue that Bitcoin, now at $100,000, is already at a high level, and future gains may not be as significant. But if you have faith, consider this: 2025 could be the next bull market. Bitcoin could reach at least $150,000, or possibly even $200,000. Historically, each halving event has been followed by a significant rally. Bitcoin is digital gold—buy one or two coins if you can afford them, or at least 0.01 BTC if you can’t. Remember its scarcity: with only 21 million Bitcoins, and even fewer in circulation due to lost keys, there won’t be enough for everyone on Earth to own one.

But Risks Still Exist

Although Bitcoin’s probability of going to zero is small, it remains a highly volatile asset. Over the past decade, it has experienced multiple crashes and bull runs. Many people gave up midway during moments of market panic. Perseverance requires strong patience and conviction. Thus, the funds invested in Bitcoin should be idle money that you can afford to leave untouched for a long time, not savings essential for daily life.

Buy it and forget it. Use spare funds to invest in Bitcoin. Don’t chase short-term gains or take loans to buy it. Always ensure that your investments are within your risk tolerance.

Conclusion and Insights

This case illustrates how a simple investment strategy, combined with unwavering discipline, can yield astonishing returns. For the average person, instead of trying to “buy the dip” or “sell at the top,” dollar cost averaging might be a more suitable approach. After all, time is the greatest ally of an investor.

You may not need to replicate this investor’s strategy completely, but the underlying principle is worth pondering: using consistent actions to face an unpredictable market might just be the wisest choice.

What Is Dollar Cost Averaging?

Dollar Cost Averaging (DCA) is an investment strategy where you regularly invest a fixed amount of money in a particular asset, regardless of its price. For instance, you could invest the same amount weekly or monthly into stocks, cryptocurrencies, or funds, without worrying about short-term market fluctuations.

The advantage of this method is that it averages out your cost over time. When the market price is low, your fixed amount buys more shares; when the price is high, it buys fewer. Over the long term, this often results in an average purchase price lower than the average market price, making it particularly suitable for those unable to predict market trends.

Advantages

Reduces Emotional Interference: Investment decisions are often influenced by emotions, such as panic-selling during a market crash or buying at highs during a bull run. DCA’s fixed investment approach helps investors stay detached from market sentiment and focus on long-term goals.
Decreases Investment Risk: Compared to lump-sum investments, DCA spreads out the investment timing, reducing the risk of “buying at the top.” While you might miss out on some opportunities if prices consistently rise, DCA helps you buy more during dips, smoothing out costs.
Supports Long-Term Goals: DCA is more suitable for those with long-term confidence in the market. For example, Bitcoin, as a scarce asset, has shown a trend of value appreciation over time. DCA allows investors to benefit by simply being patient.

Things to Note

Although DCA is a robust investment strategy, it has its limitations:

Asset Selection Is Critical: DCA works best with assets that have long-term growth potential. If you choose an asset that eventually goes to zero (like failed cryptocurrencies or high-risk stocks), even DCA can’t avoid losses. Always conduct thorough research before investing.
Consistency Is Key: DCA’s success lies in smoothing out costs, not short-term gains. Overcoming the temptation to quit, especially during market downturns, is crucial. Often, these are the best times to buy.
Returns May Not Be Maximized: A lump-sum investment early in a bull market might yield higher returns, but for most investors, timing the market is nearly impossible. DCA aims to reduce volatility risk rather than achieve the highest returns.

Dollar Cost Averaging is a simple and effective strategy, especially for those who lack the time to study the market or predict trends. This method eliminates the pitfalls of emotional trading and is well-suited to volatile markets like stocks and cryptocurrencies.

For the average person, DCA emphasizes rational investing: focusing on the compounding effects of time and mitigating the impact of short-term fluctuations. In investing, time is our ally, while impatience is often our greatest foe.

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