⭐ Merited by JayJuanGee (1)
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It doesn't give you lower prices, but it does work as an insurance in both ways and it lets everyone who uses DCA sleep more calmly. But apart from good or bad sleep when someone dumps a lump sum and bitcoin were to take a dive right afterwards, I quickly took this screenshot without any cherry picking and it shows a lot of important information.
I forgot the dollar scale here but bottom is around 16k (Nov 22) and top is around 71k (March 24). What it shows is that I assume many people were hesitant to buy in April and November 21' when BTC was around 65k. Understandable as it peaked and people feel afraid to buy I guess when an asset peaks, but that doesn't mean they are making the right call not to buy. What if it goes straight towards 500k? Those who then decided to get into BTC and went for DCA either on a weekly or monthly basis benefitted from a very long time of low prices. They were able to accumulate BTC =< 30k for almost 33 month with almost 7 month averaging below 20k. It doesn't matter what the price did pretty much, but DCA would have given anyone a good position. If it constantly went up and someone used DCA, position would be good. If it did what it did and someone did DCA for almost 3 years, position would be awesome. If it went sideways all the time, position would be neutral (and probably still good). Never bad sleep.
I remember someone running a thread here telling everyone that he sold the marriage jewelry of his wife to put it all into BTC. This wouldn't quite be what I would recommend (unless your wife severely cheated on you and is going to demand alimentation after divorce anyway).
DCA can be a true investment weapon for someone who isn't as deeply and passionately into the tech and willing to take serious risks, but still understands that this is a train they should hop on.
The last dump is one more example that bitcoin does what it does. It is volatile, it will have its corrections, it will have its irrational movements, it will react to global economic events and data, it will do all the things other assets do plus a little bit more because it is far more complex and far more multifaceted than a usual company stock.
I don't have any problem with the various discussion points of your post, and surely I agree with your overall conclusion that DCA is a kind of technique that has a lot of benefits; however, I still would like to suggest that DCA ONLY works if the investment asset ultimately goes up in value at the time that a person would want to get out of the investment.
There is not any guarantee that the price of the asset will go up, yet surely some investments are better than others and BTC is surely likely one of the great investments of our time with decently good chances that the prices are going to gravitate in the upward direction in the long term rather than either down or flat.
That's absolutely correct and that is why I took a fairly long time window to show that DCA would have worked even for those who got started at the peak in 2021. It must have felt bad during that downtime from July 2022 to July 2023, but it is exactly the patience and commitment that would have paid off for everyone sticking to a DCA plan.
I know it is not appropriate to use absolute terms like "bitcoin will go up no matter what" etc. But I have read all these articles stating that bitcoin is too volatile for being a currency or bitcoin has no intrinsic value like stocks because it doesn't pay dividends etc. etc. You know the whole list of arguments news outlets or pseudo finance experts bring forward to tell the world how bad bitcoin is. But again and again I am shocked how they approach bitcoin in general. As if it was an asset class similar to a stock or would carry the same risks like many startups during the dotcom bubble. But it is fundamentally different in literally all regards. Many people don't understand what bitcoin's intrinsic value is composed of. I could come up with many characteristics that generate intrinsic value for bitcoin.
Last but not least the network's openness and censorship resistance will become more and more valuable as network effects further enfold with advancing UI technology and bandwidth improvement in less developed areas of the world. When email providers tried to expand their user base by allowing users to interact only with users of the same provider, they quickly realized that this is not going to work out and some of them failed. Walling off their service from the rest of the world didn't work.
Unless some disaster happens on the tech side, the arguments against bitcoin's long-term success (even if only modest success) are pretty slim. It's funny to read how it can't work out as it is too volatile and central banks are an important integral part of a functioning monetary system as they can take whatever measure is needed to bring about stability for the system... Well, it seems quite the opposite is true and I consider the volatility an important part of bitcoin finding its way into the right hands through redistribution as those deciding to stick to it despite (or actually because of) volatility understand the technology better than those who jump ship when it goes 5% up and down. However, everyone, whether weak or strong hand, plays a role in the bitcoin ecosystem.
I am convinced that one day we will be talking about USD cent to satoshi parity.