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Investing five dollars a day might sound like a small amount, but for one Bitcoin enthusiast, it’s starting to add up. A year ago, this man decided to buy about $5 (roughly €4) worth of Bitcoin every single day. Now, he has accumulated 0.0224 BTC, which is currently worth around €1,670.
What is Dollar-Cost Averaging (DCA)? #
This method is known in the financial world as ‘dollar-cost averaging,’ or DCA. The idea is simple: you regularly invest a fixed amount of money into an asset, regardless of its price. Whether the price is high or low, you keep buying. This prevents you from panic buying or selling at the wrong times. On average, it also gives you a good entry price.
DCA is based on the principle that ’time in the market’ is more important than ’timing the market.’ After all, nobody knows exactly when a cryptocurrency will hit its bottom or its peak. By investing in increments, you reduce the risk of buying at a peak.
Someone who invests a small amount daily builds a position almost without noticing. For example, if you invest €5 every day for a year, you’d invest a total of €1,825. If the Bitcoin price develops favorably, that amount could grow significantly.
Of course, the reverse is also true: if the price falls, your investment becomes worth less. But because you buy at different times and at different prices, you spread out your risk.
Starting Early Pays Off #
If you had applied this method five years ago, you might have enough saved up for a mid-range car today. If you had started ten years ago, your investment could have grown to the value of a used Ferrari. It’s easy to say in hindsight. But it mainly shows what patience and consistency can achieve.
DCA is not a guarantee of profit, but it is a strategy that brings calm to unpredictable markets. Whether you’re just starting to invest or have been active for a while: investing regularly and in a structured way can be a smart move for long-term investors.
Curious what such a strategy could yield for you? With an online DCA calculator, you can calculate exactly what return you would have achieved with different starting points.
Bitcoin and Regret: A Familiar Pair #
We all know the stories. Like the teenager who bought $1,000 worth of Bitcoin at age 12 and became a millionaire. Or the man who wants to excavate an entire landfill because a hard drive with €800 million in lost Bitcoin is supposedly buried there.