Dollar-cost averaging (DCA) is defined as purchasing at determined intervals regardless of price, and has proven to be one of the most effective and safest ways to accumulate bitcoin. It allows the individual to mitigate bitcoin’s wild volatility, and have peace of mind in their saving strategy.
DCA is also not only good for your net worth, but it’s also good for Bitcoin. As Hass McCook explains in “How The DCA Army Will Drive A $1 Million Bitcoin Price,” Bitcoin benefits in many ways if there are enough people doing auto-DCA, thus casually eating away at the total bitcoin supply.
If you DCA on a long enough time horizon, you can profit a lot — especially after each halving, which results in the new supply of bitcoin created daily getting cut in half every four years. Historically, bitcoin’s price has always seen a meteoric rise and a new all-time high throughout each year following every halving so far.
The bull run in 2017 made bitcoin go mainstream, with many jumping in on the hype. Let’s run the numbers and see where you would be if you started DCAing into bitcoin back then.
If you were to have started daily DCAing $10 into bitcoin every single day since August 12, 2017, you would have invested a total of $14,610 dollars at the time of writing. That money saved in bitcoin would be worth a total amount of $84,506, approximately 1.82 BTC. That’s a total return of 478.41%.
Now what if we were to have taken that same money but instead invested it in what many claim to be a competitor to Bitcoin: gold?
If you would have invested that same money into gold instead of bitcoin, today you would have a total of $17,177. A total increase of only 17.57%. This makes for a truly pathetic comparison and it has to make you think, if you held gold over bitcoin during this time then you lost out on 460.84%. Gold all of a sudden doesn't seem to be too good a store of value, huh?
If you were to have DCAed $100 a week from August 12, 2017, you would have invested a total of $20,900. Today that money would be worth a grand total of $115,718, approximately 2.49 BTC. That’s a total increase of 453.68%.
Bitcoin absolutely crushes its competition, gold. If you would have invested that $20,900 into gold over that same, then today you would only have $25,075 — a total increase of 19.98%.
If you were to have done a $1,000 per month DCA into Bitcoin, you would have invested a total amount of $48,000. That money today would be worth $200,066, or approximately 4.31 BTC. That's a total increase of 316.81%.
Just like the daily and weekly buys, gold has absolutely been steamrolled by bitcoin. Your investment of $48,000 into gold would now be worth $59,191. An increase of only 23.32%.
This 2021 bull run is not over yet, as just about everyone who is knowledgeable in the industry is expecting a second leg up to happen in the remaining half of this year. Many are making huge price predictions such as $100,000, $250,000, and even over $500,000.
Let’s say the price rises to $250,000 later this year. That 1.82 BTC from daily buying will be worth $455,000. That 2.49 BTC from weekly buying will be worth $622,500. And that 4.31 BTC from monthly buying will be worth $1,077,500.
If you were to have started DCAing even earlier than four years ago, then you would have accumulated more bitcoin and become even wealthier. Bitcoin was the best-performing asset of the last decade, and is considered by many to be on track to becoming the best performing asset of this decade as well. When choosing to store wealth, it’s important to choose wisely. Hold bitcoin, or lose value holding other assets.
"History shows it is not possible to insulate yourself from the consequences of others holding money that is harder than yours." - Saifedean Ammous