I wanted to figure out if there is a difference between DCA frequency. Question is how often should we invest?
Its obvious for example that on a bull year than a single investment ( yearly ) will be better than every other day but on a bear market higher frequency however is better than one large purchase.
However the question is for bitcoin how much of a difference are we talking about?
In this analysis I breakdown scenarios by the following.
yearly, monthly, bi-montly, weekly, every other day, daily
I analyzed by year, 2020, 2021, 2022, 2023 ( later in the combined them all)
I like this breakdown because it gives a good sample of, of bullish and bearish years.
Here is the breakdown. simulation ~ 5K per year.
1=yearly
12=monthly
24= every other week
52=weekly
182=every other day
365=daily
2020
| frequency | total_roi | total_invested | total_exec |
|---|---|---|---|
| 1 | 1.865748 | 5000.000 | 1 |
| 12 | 1.038334 | 5416.667 | 13 |
| 24 | 1.111333 | 5208.333 | 25 |
| 52 | 1.053816 | 5096.154 | 53 |
| 182 | 1.069178 | 5027.473 | 183 |
| 365 | 1.070692 | 5013.699 | 366 |
2021
| frequency | total_roi | total_invested | total_exec |
|---|---|---|---|
| 1 | -0.2975496 | 5000.000 | 1 |
| 12 | -0.5278616 | 5416.667 | 13 |
| 24 | -0.5432732 | 5208.333 | 25 |
| 52 | -0.5434674 | 5096.154 | 53 |
| 182 | -0.5436015 | 5027.473 | 183 |
| 365 | -0.5448175 | 5000.000 | 365 |
2022
| frequency | total_roi | total_invested | total_exec |
|---|---|---|---|
| 1 | -0.5673042 | 5000.000 | 1 |
| 12 | -0.1881056 | 5416.667 | 13 |
| 24 | -0.1814871 | 5208.333 | 25 |
| 52 | -0.1704383 | 5096.154 | 53 |
| 182 | -0.1703728 | 5027.473 | 183 |
| 365 | -0.1712063 | 5000.000 | 365 |
2023
| frequency | total_roi | total_invested | total_exec |
|---|---|---|---|
| 1 | 0.2411299 | 5000.0000 | 1 |
| 12 | 0.0039368 | 1250.0000 | 3 |
| 24 | -0.0329279 | 1041.6667 | 5 |
| 52 | -0.0270771 | 1057.6923 | 11 |
| 182 | -0.0348651 | 989.0110 | 36 |
| 365 | -0.0376854 | 972.6027 | 71 |
combine 2020,2021,2022 and 2023 so here yearly will be executed 4 times
| frequency | total_roi | total_invested | total_exec |
|---|---|---|---|
| 1 | 0.3102675 | 20000.00 | 4 |
| 12 | 0.1298016 | 16250.00 | 39 |
| 24 | 0.1295504 | 16250.00 | 78 |
| 52 | 0.1086000 | 16057.69 | 167 |
| 182 | 0.1089269 | 16043.96 | 584 |
| 365 | 0.1095535 | 15986.30 | 1167 |
tl;dr:
the adage time in the market is better seems to hold true here, only one year , bear market of 2022 did yearly performed the worst, however with that said not many people can afford a single lump purchase, in this case weekly or even monthly seems to be the best compromise.
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