Dollar Cost Averaging Bitcoin 📈
How to slowly accumulate bitcoin at a low cost basis.
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Bitcoiners,
One of the most proven ways to slowly accumulate bitcoin at a low cost basis is Dollar Cost Averaging (DCA).
Dollar cost averaging is a concept applied to many other investment vehicles such as buying stock in a company. Rather than buy a large lump sum as an investment, the idea is to spread the investment out into smaller purchases. The concept applies especially well to bitcoin because bitcoin is so volatile.
Here is an overview of dollar cost averaging applied to bitcoin so you can learn the advantages and start implementing it yourself.
DCA Example
Dollar cost averaging is the practice of investing a fixed dollar amount on a regular basis, regardless of the share price.
The chart below courtesy of @ChartsBTC shows how dollar cost averaging into bitcoin weekly over 4 year periods yielded a different average price paid per bitcoin.
Let's take the 2019-2022 period as an example with a $100,000 budget to invest in bitcoin. You could have gotten lucky and bought 28.5 bitcoin for a price of $3,500 per bitcoin when it was lowest in early 2019. Alternatively, you could have gotten unlucky and bought 1.4 bitcoin for a price of $69,000 per bitcoin when it was highest in mid 2021.
Now, if you would have Dollar Cost Averaged the $100,000 weekly from 2019-2022, you would have bought 8.3 bitcoin at an average price of $12,108.
Dollar cost averaging is a method to keep stress low and put investing into bitcoin on autopilot in order to achieve a relatively low price.
I personally dollar cost average using Swan Bitcoin (linked below).
Happy Tuesday,
-Pod
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I personally use Swan Bitcoin to purchase Bitcoin! Use the link below to get $10 free dollars worth of Bitcoin. Takes less than 5 minutes to sign up and I get a small commission :)
Eric Podwojski
Founder, Bitcoin EDU
Twitter:Â @epodrulz
Disclaimer: This should go without saying: This is not financial advice. This is not investment advice. I write this newsletter for education and entertainment. Act accordingly.