Dollar Cost Averaging (DCA)

Dollar Cost Averaging (DCA) is investing a fixed amount of money at regular intervals (weekly or monthly) no matter the price.

It’s regarded as one of the most effective strategies for investing, especially in volatile markets like crypto.

DCA helps you avoid trying to time the market and reduces emotional decisions, since you invest no matter what the price is. It works well with index funds because you’re buying a wide variety of assets over time, which spreads out risk and helps your money grow steadily in the long run.

Imagine you invested $100 every month into a crypto index fund for 5 years:

• When prices are low, you buy more units of the fund.
• When prices are high, you buy fewer units, but your past investments grow in value.
• Over time, your average cost per unit is lower than the market’s average price, and your portfolio grows steadily.

In traditional finance regular intervals for DCA are usually Monthly or Quarterly.

For the crypto markets intervals can vary, for Blue Chip tokens like Bitcoin or Ethereum monthly intervals make sense.

For more speculative tokens like Memecoins it may make more sense to DCA everyday or every week.