What Is Dollar-Cost Averaging (DCA)?
Classic DCA:
- Invest the same amount at the same time (e.g., $100 every Monday)
- No matter the price
- No matter the market conditions
- Just buy automatically and ignore everything
Why people love it:
- Removes emotion from investing
- Averages out volatility
- Requires zero market timing
- “Time in the market beats timing the market”
Sounds great. But here’s the problem:
DCA treats Bitcoin at $20K the same as Bitcoin at $70K.
That’s insane. You’re buying the same amount at the top and at the bottom.
Results (Jan 2018 – Feb 2025)
| Strategy | Total Invested | BTC Accumulated | Current Value | ROI | |———-|—————-|—————–|—————|—–| | Blind DCA | $36,400 | 1.84 BTC | $128,800 | +254% | | Fear-Based DCA | $36,400 | 2.12 BTC | $148,400 | +308% | | Tactical DCA | $36,400 | 2.58 BTC | $180,600 | +396% |
Tactical DCA outperformed Blind DCA by 40%.
Same money. Same timeframe. Vastly different results.
The Better Way: Tactical DCA (The Strategy)
Here’s the step-by-step strategy that beat blind DCA by 40%:
Step 1: Set Your Base Buy Rate
Instead of $100/week every week, set a base rate of $50/week.
Why $50 instead of $100?
- Reserves capital for opportunities
- Lets you 2-4x your buys during fear
- Still ensures consistent accumulation
Step 2: Define Your Buy Zones
Use these 3 signals to identify accumulation zones:
Signal 1: Price Drop from ATH
- Bitcoin down 30-40% from recent peak = 2x your buy ($100/week)
- Bitcoin down 50-60% from recent peak = 4x your buy ($200/week)
- Bitcoin down 70%+ from recent peak = 6x your buy ($300/week)
Signal 2: MVRV Ratio
- MVRV < 1.0 = Extreme fear zone = 4x your buy
- MVRV 1.0-1.2 = Fear zone = 2x your buy
- MVRV 1.2-2.5 = Neutral = 1x your buy (base $50)
- MVRV > 2.5 = Greed zone = 0x your buy (stop buying)
Signal 3: Funding Rates
- Funding rate < -0.05% = Shorts overleveraged = 2x your buy
- Funding rate -0.02% to +0.05% = Neutral = 1x your buy
- Funding rate > +0.10% = Longs overleveraged = 0x your buy
Step 3: Stack the Signals
When multiple signals align, multiply your buys:
| Signals | Weekly Buy Amount | |———|——————-| | 0 signals (neutral) | $50 | | 1 signal (mild opportunity) | $100 | | 2 signals (strong opportunity) | $200 | | 3 signals (extreme opportunity) | $300+ |
Example (March 2020):
- Bitcoin crashed from $10K → $4K (down 60%) ✅
- MVRV dropped to 0.8 ✅
- Funding rates: -0.08% ✅
- Action: Buy $300/week for 4-6 weeks
Example (November 2021):
- Bitcoin at $69K (near ATH)
- MVRV: 3.5 (extreme greed)
- Funding rates: +0.15%
- Action: STOP buying. Wait for pullback.
Step 4: Automate the Base, Manual the Spikes
Automate $50/week:
- Set up recurring buy on Coinbase/Kraken
- This ensures you never stop accumulating
Manually add during dips:
- Keep $500-$1,000 in cash reserves
- When signals align, manually buy $200-$300
- Replenish reserves gradually
Common Objections (And My Responses)
Objection 1: “But this requires timing the market!”
My response:
- Not timing. Risk management.
- You’re not predicting tops and bottoms.
- You’re buying MORE when it’s cheaper and LESS when it’s expensive.
- That’s basic common sense, not market timing.
Objection 2: “What if Bitcoin never crashes again?”
My response:
- Bitcoin ALWAYS crashes. That’s its nature.
- Since 2011, Bitcoin has had 7 crashes of 50%+
- The base $50/week ensures you don’t miss out if it only goes up
- But historically, you’ll get 2-3 major opportunities per cycle
Objection 3: “I’ll panic and stop buying during crashes.”
My response:
- That’s a discipline problem, not a strategy problem.
- Set rules BEFORE the crash. Write them down.
- Automate as much as possible.
- Use FOMO in reverse: “Everyone is scared = I should buy more”
Objection 4: “This sounds complicated.”
My response:
- It’s literally: “Buy more when Bitcoin crashes, buy less when it pumps.”
- That’s not complicated. That’s intuitive.
- Yes, checking MVRV/funding rates takes 5 minutes/week.
- Is 5 minutes worth 40% extra returns? You decide.
For Advanced Investors: Tax-Loss Harvesting DCA
If you’re in a taxable account, add this layer:
When Bitcoin drops 30%+:
- Sell your highest cost-basis Bitcoin (crystallize losses)
- Immediately rebuy (wash sale rules don’t apply to crypto in most countries)
- Lock in tax deduction while maintaining position
Why this works:
- You get to deduct losses from your taxes
- You lower your cost basis
- You maintain full Bitcoin exposure
Example:
- You bought Bitcoin at $60K (high point)
- Bitcoin drops to $40K
- Sell your $60K Bitcoin = $20K loss (tax deduction)
- Immediately rebuy at $40K
- New cost basis: $40K instead of $60K
Check with a tax professional for your jurisdiction.
The Bottom Line
DCA is better than doing nothing.
But tactical DCA is better than blind DCA.
If you’re going to commit years of your life to accumulating Bitcoin, why not do it the smart way?
Same discipline. Same consistency. Better results.
Do you DCA blindly or tactically? What’s your strategy? Drop it in the comments.
Featured image: Chart comparing blind DCA vs. tactical DCA returns Data sources: TradingView, Glassnode, LookIntoBitcoin.com
Related Reading
- Why Bitcoin’s 4-Year Cycle Theory Is Dead (And What Comes Next)
- The Crypto Fear & Greed Index Is Bullshit—Here’s What Actually Works