Consistent, diligent Bitcoin (BTC) buyers who have stacked sats for two years have greatly outperformed investors in other asset classes – despite entering the crypto market at one of the worst possible times.
Bitcoin DCA Is The Way
To dollar cost average (DCA) is to consistently buy Bitcoin in equal amounts of fiat currency at regular time intervals (daily, weekly, etc) irrespective of the asset’s price. It’s a popular investment strategy for those wishing to ease the burden of timing a volatile market and intending to use BTC as a long-term savings vehicle.
According to Dylan LeClair – Market Intelligence Expert for UTXO Management – this strategy hasn’t been as profitable for TradFi investors. Diligent gold and SPX buyers have only profited 5% over the same period, while long-duration U.S. bondholders are down roughly 14% (excluding dividends).
November 10, 2021, was the day Bitcoin tapped its $69,000 all-time high. Over the next 12 months, rising interest rates and a cascade of contagious industry blowups drove its price down to $15,500 by November 2022. Another year later, Bitcoin has returned to $36,000 per coin – up 119% for anyone who bought at the start of 2023.
Can DCA Ever Go Wrong?
When Bitcoin traded for $30,000 back in July, data from CryptoQuant showed that beginning a DCA strategy at almost any time would have left investors profitable, with the exception of those who began buying from June 2020 to September 2021.
As of today, LeClair’s data shows that this range of unprofitable entry points has shrunk even further. For example, those who began to DCA BTC at its previous $64,000 all-time high in April 2021 would still be up 27% today. By comparison, Nasdaq investors would be up 13%, while gold buyers would be just 6% profitable. Bondholders would be even deeper in the red at -17%.
Hot Take
Starting a dollar-cost averaging strategy with Bitcoin has proven to be very profitable over the past two years despite entering at a peak in November 2021. This investment approach has significantly outperformed traditional financial assets such as gold and bonds during the same period. It goes to show that consistency and long-term vision can lead to substantial gains in a volatile market like cryptocurrency.
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