For clarity attempting to time the market before making purchases of Bitcoin does not define DCA strategy because by definition it entails buying Bitcoin without any form of timing the market so any investor attempting to time the market before buying Bitcoin has already gotten a shift from the use of DCA to another strategy which should be the buying the dip and can no longer be considered as DCA even if he DCA from the previous buying, timing the market is not associated with the real definition of the DCA strategy and usage it doesn't tally.
DCA means Dollar Cost Averaging. it is an investment strategy. where you do not have to invest a large sum at once. you can buy bitcoin with a fixed amount weekly or monthly. for example if you want to buy $120k worth of bitcoin but you do not have enough money. you can following DCA method. you can buy $10k of btc each month for 12 months, and after a year, your target will be reached.
the advantage is that when the price drops, you buy more btc, and when the price rises you buy less. at the end of the year, you get an average price. For example:
- month 1: btc price $100 → invest $100 → get 1 btc
- month 2: btc price $50 → invest $100 → get 2 btc
- month 3: btc price $200 → invest $100 → get 0.5 btc
total spent: $300 total coins: 3.5 btc average price per btc: $300 ÷ 3.5 = $85.71
advantages: you don’t have to worry about market ups and downs. long-term investing can increase profit. mental stress is less. beginners can invest easily.
disadvantages: if the market only rises, buying all at once could be better. if investing short-term, DCA may give less profit. DCA is a method of gradually investing in bitcoin over time to reduce losses and get a good average price.
For an investor being intentional about taking investment decisions based on market conditions doesn't seem to be an effective strategy for me, if the plan is to buy and hold for long then whatever price you consider to be high as when the price rises will still a dip tomorrow when Bitcoin will make new highs, am not encouraging the idea of being intentional about buying less when the price rises and buying more when the price drops, buying with the available % of discretionary income I will choose to invest with without considering the market conditions more effective for me because I will be free from any form of fear and greed index over the market fluctuations.