DCA protects you because you are not able to know the BTC price in the future. For sure, if you know that the BTC price is going down, then it is better to wait and buy the dip, yet the overwhelming majority of the time, you don't know that the BTC price is going down, even when it seems that all signs are that the BTC price might go down, it ends up going up.
Fair point. The truth is nobody really knows what BTC is going to do short term. Even when it feels obvious that a dip is coming, Bitcoin does it own thing. I have seen times when I felt sure it was going lower, and it just turned around and ran up 10-20% in few days. I believe DCA protects from overthinking yourself out of the market. At this point it is not about being perfect, it is about being in.
DCA does not protect you from down.. even though perhaps if you are buying all of the time (such as every week), there will be times when the BTC price is up and other times in which the BTC price is down, but you cannot really know in advance, so then your BTC price ends up being largely an average of the whole time that you had been buying, and if you are trying to time the downs, then you may or may not have success to have a lower price per BTC... yet it seems that even if each of us would like a lower price per BTC, there is almost no way that we we can accomplish the keeping of our average cost per BTC low if we are also wanting to keep buying bitcoin and growing our bitcoin stash... which in some sense it seems that it should be a higher goal to grow our BTC stash.
Exactly. DCA does not mean you escape short term dips, it just means we don’t get wrecked trying to be too smart. The people who wait for the perfect entry most times end up not buying at all. Sure, you could get lucky and time a dip once or twice. But over the long run, I feel it underperforms. With DCA, cost becomes the average of all your buys. It is simple, and that is what gives it power, you just keep buying…
Guys who are trying to accumulate bitcoin every single week likely know that every single week they have to decide if to invest all of their available BTC purchasing money in DCAing into bitcoin or if they are going to hold some back for either buying on the dip or for some passage of time, and there are trade-offs since guys are never going to know whether the BTC price is going to go down or not..and many times, especially during a bull market is that the BTC price is going to go up, but even the presumption could be wrong.. which the same is true during a bear market, there maybe be a presumption that the BTC price is going to go down, yet the presumption could end up being wrong... So each guy has to decide each week, an there is a question regarding the extent to which it is valuable to hold back backing or to defer buying based on conjecture that there could be a dip that might not end up happening.
And you’re right people need to live it to really get it. It is one thing to hear examples, another thing to feel FOMO because you waited too long, or regret not buying that dip. DCA buyers learn fast. Every Friday or Monday or whatever your DCA day is, you’ll be faced with that same choice... It teaches discipline and builds a relationship with the asset. And in time, you start to see how the market doesn’t care what we think it should do.