DCA Crypto: Guide to Investing Without Losing Money and Mind

Have you been taking a nap under a rock and still don’t get DCA? I’ve got you.

What the Heck Is DCA?

Dollar-Cost Averaging (DCA) is a strategy of investing in an asset on a regular schedule. Ideally, you spend the same amount of money no matter what the price is.

Example: You buy $100 worth of Bitcoin every week.

Simply speaking, it’s just saving, but the market is your piggybank that puts your money to work. By always investing the same amount, you buy more when the asset is cheap and less when it’s expensive—that’s the “averaging” part.

Why “Averaging” Is So Effective

DCA works by taking emotions out of investing. Most people freak out when prices are low and only want to jump in when the market is hot and prices are high. But listen to this wisdom from a market legend:

Is DCA Profitable?

I once explained DCA to a young crypto YouTuber, and he asked:

“How can I make money with it?”

It was a funny moment, but it made me realize that I might be too deep into the topic to resonate with beginners. So here’s the answer:

The stock market grows on average over 10% a year, and Bitcoin grows even faster. Making money on the market can be really easy: just buy Bitcoin or the S&P 500 and hold it. Done.

If you want to play around with some fun calculations, open an account at Deltabadger and use our calculator.

Unfortunately, most investors can’t do it. I mean—they can, but instead, they fall for these mistakes. Avoid these, and you’re ahead of the game. Ready?

If you’re planning to buy some meme coins, well, I can’t help you there. Sometimes you need to get burned to learn. For everything else on the list? The answer is dollar-cost averaging.

Where’s the Trick?

Like with everything in life, there must be a downside, right? Let’s look at them:

DCA is not a magic bullet. It will not make you rich overnight, and if you invest in the wrong thing, it will not make it a good investment.

What it will do is calm your monkey brain, so you can do what deep inside you know you should: invest patiently and stick to your guns while the price jumps through hoops.

When the market is going down, instead of panicking, you just DCA on the way down, buying the dip and improving your average price. Then, when the market reverses, you find yourself “in the green” quicker, making it easy to sleep deeply at night even when investing in volatile assets like Bitcoin.

A common question people ask:

Is DCA Better Than Investing a Lump Sum?

First of all, whatever numbers you get, for most of us it’s only theory. Most investors don’t sit on cash and just grow their portfolio slowly by investing a little bit from every paycheck. This is already “averaging” whether you want it or not. However, you can still mess it up if you always put money in a different trendy asset or don’t invest when the price goes down.

Don’t overthink it—set your schedule and stick to it. If you decide to invest weekly—invest weekly! One of the ways to make it easier is starting our free bot. You can already do it for crypto, and soon also for stocks with IKBR.

But let’s say that you have a big sum that you want to put into your money-making piggybank. Should you skip DCA?

I know I wouldn’t.

Timing the market sounds easy only in retrospect, but what if you put $100k in, and it’s just before the asset drops 30%? For some reason, close to the top, it’s always the time when you feel like investing a lot. Hello, sleepless nights and wrong decisions.

Start your DCA bot instead and invest the same amount over a year or two. People lose in a growing market not because they picked the wrong strategy, but because emotions didn’t allow them to stick to it.

DCA is the easiest strategy to stick to. Take advantage of it.

Should I DCA Monthly, Daily, or Only on Monday?

There is a lot of misleading information on the internet about what is the best schedule or day for dollar-cost averaging. The truth is, long term it doesn’t matter. At Deltabadger, we performed a lot of tests, and the longer the schedule, the more negligible the difference. The whole difference often comes from the very beginning: if the asset dropped rapidly right after you bought, it was better to go in slowly, but if it immediately went up, it was better to start with a bigger chunk. You don’t know what it will be, so don’t worry about it. The longer you DCA, the smaller the difference.

What Are the Blue-Chip Cryptos?

One way people are losing money every day is simply investing in the wrong thing. If you want the excitement of chasing the next trendy thing, I’ll give you the simplest risk management strategy:

Split your investing into two portfolios. The main one should be at least 80% of what you have. Keep this one “boring,” investing only in “blue chip” assets like Bitcoin, gold, Vanguard ETFs. The smaller satellite portfolio is where you can do crazy things (if you have to).

When it comes to crypto, I never advised anybody to invest in tokens other than Bitcoin and maybe Ethereum. Just look how the top 10 cryptocurrencies changed in the last 11 years:

Year	1	2	3	4	5	6	7	8	9	10
2014	BTC	LTC	XRP	PPC	DOGE	NXT	NMC	MSC	DRK	BLK
2015	BTC	XRP	LTC	DASH	XLM	DOGE	NXT	BTS	MAID	BANX
2016	BTC	ETH	XRP	LTC	DASH	MAID	DOGE	DGD	XEM	STEEM
2017	BTC	ETH	XRP	XEM	LTC	DASH	ETC	BCN	XLM	XMR
2018	BTC	ETH	XRP	BCH	EOS	LTC	ADA	XLM	TRX	IOTA
2019	BTC	ETH	XRP	BCH	LTC	EOS	BNB	USDT	XLM	ADA
2020	BTC	ETH	XRP	USDT	BCH	BSV	LTC	BNB	EOS	XTZ
2021	BTC	ETH	USDT	ADA	BNB	XRP	DOGE	USDC	DOT	UNI
2022	BTC	ETH	USDT	BNB	USDC	SOL	XRP	ADA	LUNA	AVAX
2023	BTC	ETH	USDT	BNB	USDC	XRP	ADA	DOGE	MATIC	SOL
2024	BTC	ETH	USDT	BNB	SOL	USDC	XRP	DOGE	TRX	TON

As you can see, there are no “blue chip” cryptos besides Bitcoin and Ethereum. Everything else hasn’t proven itself yet.

Is DCA Into Crypto Still Worth It in 2024?

If you’re looking for “1000X gains”—buy a lottery ticket. Your chances are also microscopic, but at least you cap how much you can lose. The million-dollar Bitcoin is still ahead of us, and it’s coming eventually, but not next year. We’re all looking for shortcuts, and it’s okay to try in your small satellite portfolio. Never ever do it with the majority of your holdings. If the S&P 500 grows 10% a year on average, anything above that is a big success.

Can Bitcoin be a big part of this success?

Absolutely.

So, stop chasing “the next Bitcoin.” Do you want to step up your game? Do this instead:

Build a Lazy Portfolio That Lasts

A lot of people buy other crypto believing they diversify. In reality, all crypto tokens are massively correlated. To diversify, you need assets that are not correlated. So, when Bitcoin goes down, the other thing in your basket goes up. If you want to stay on crypto exchanges, the only less correlated asset you can find is PAX Gold. But what a lot of investors burned with trading crypto do is look at stocks and discover traditional investment advice: building a lazy portfolio of dividend stocks or Vanguard ETFs and embracing the magic of slow but consistent compounding effect.

There’s no reason to choose. The best portfolio includes different asset classes. Holding stocks, gold, and Bitcoin in your basket is what I recommend. Traditional investors make the mistake of excluding Bitcoin, and if you come from the crypto world, you can have an advantage by not being biased.

In a world where AI and robots boost global productivity, I don’t see the market suddenly entering a 10-year depression, but Bitcoin and gold are still insurance worth having. Holding around 20% of those assets in your portfolio is what I recommend to friends.

Instead of DCA-ing into random crypto, do it into a portfolio: 70% of S&P 500, 20% of gold, 10% of Bitcoin. Sounds interesting? Stick around because this is where Deltabadger is heading: DCA and rebalancing of automated multi-asset portfolios is what we’re after.

(Hint: you may need an account at Interactive Brokers soon.)

DCA is still the most recommended way to invest for most of us. As grandpa Warren says:

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Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investing involves risks, including the possible loss of principal. Always conduct your own research before making investment decisions.