What Is Dollar-Cost Averaging?
Dollar-cost averaging (DCA) is a strategy where you invest a fixed amount of money at regular intervals — weekly, biweekly, or monthly — regardless of the asset's current price. By spreading purchases over time, you avoid the risk of investing a lump sum at a market peak.
How DCA Works
If you DCA $500/month into Bitcoin, you buy more BTC when the price is low and less when it's high. Over time, this produces an average purchase price that smooths out volatility. The strategy removes emotional decision-making and the impossible task of timing the market.
Why It Matters for Traders
DCA is the preferred accumulation strategy for long-term crypto investors. It's psychologically easier to maintain during drawdowns and historically outperforms lump-sum investing in volatile assets when the buyer can't predict short-term direction. Many traders use DCA for core positions while actively trading a separate allocation.
