What is DCA and why does it work?
Dollar Cost Averaging (DCA) is an investment strategy where you invest a fixed amount at regular intervals — regardless of price. When price is high, you buy fewer tokens. When price is low, you buy more. Over time, the average purchase price automatically optimizes.
DCA eliminates one of the hardest investing challenges: market timing. Even professionals rarely manage to consistently buy bottoms and sell tops.
DCA vs Lump Sum
- Lump Sum: statistically better in bull trends, but psychologically difficult
- DCA: less FOMO, better average price through cycles, peace of mind
DCA in practice
Investing $100 in BTC every month from January 2020 to December 2021 — 24 payments, $2,400 total. Your average purchase price would have been far below the ATH of ~$69,000. Buying everything at once at the peak in November 2021 would have been catastrophic.
Automate DCA on Binance
Binance Auto-Invest: Earn → Auto-Invest → select crypto → set amount and interval. System buys automatically. OKX has an equivalent "Recurring Buy" feature.
When to stop DCA?
Continue DCA through bear markets as long as you believe in the project fundamentals. If fundamentals change (team leaves, hack, regulatory ban), reconsider.