Dollar Cost Averaging – DCA, weekly Bitcoin purchase.

Dollar Cost Averaging (DCA) is a strategy where you invest a fixed amount of money into an asset—like Bitcoin—on a regular schedule (e.g., weekly or monthly), regardless of its current price. Here’s a breakdown of how it works and why it’s commonly used:

How Dollar Cost Averaging Works

1. Set an Amount
   You decide to invest, say, $100 every week into Bitcoin.
2. Buy on a Schedule
   You buy Bitcoin every week on the same day and time (e.g., every Friday at noon), no matter what the price is that day.
3. Get Varying Amounts
   Since Bitcoin’s price changes, some weeks you’ll get more BTC (when prices are low), and other weeks less (when prices are high).

Why Use DCA?

• Reduces Timing Risk
  It avoids the need to “time the market” (i.e., guessing when the best time is to buy).
• Smooths Out Volatility
  Because you’re buying over time, your average cost tends to smooth out the effects of short-term price swings.
• Psychological Discipline
  It removes emotional decision-making—no panicking during dips or FOMO-buying during spikes.
• Long-Term Focus
  DCA works best for long-term investors who believe in the asset’s value over time.

5-Week DCA Example (May 3 – May 31, 2025)

Assuming you invested $100 each Saturday, here’s how your Bitcoin purchases would have accumulated:

Bitcoin reached an all-time high of over $111,000 earlier in May but has since experienced a pullback, trading around $104,000 as of May 31, 2025 . This volatility underscores the potential benefits of a DCA strategy, which can help investors navigate market fluctuations without the need to time the market precisely.