This is what a 5 year BTC DCA looked like at different points in time...

We talk about DCA in this sub a lot, but it's often times difficult to understand what the end result of a medium-term DCA strategy can look like, and how it might have looked for other people at different times.

I was curious about what Bitcoin DCA (dollar cost averaging) might look like for different people over different multi year timespans, so I hopped on a Bitcoin DCA calculator and did a bit of time traveling.

It turns out, DCA would have worked out pretty well for most people over most five year timespans.

Here's a quick breakdown (note: these are all based on August 3rd start dates in their respective years)

The first thing you notice is that luck has a lot to do with it. Someone who started their 5 years of dollar-cost averaging in 2012 saw their BTC gain a lot more value than someone who started in 2015.

To illustrate this, someone who started their five year DCA journey on April 11th 2016 and ended on April 11th 2021 walked away with $139,307 if they converted their BTC to USD on the last day of that five year period. Compare that to someone who started in July 20th of 2016... They'd be at $55,996. Just a few months resulted in a 40% loss of value. Timing is everything, but it's also something we have less control over than we think:

Impossible to time that! Speaking of timing...

The counter argument to DCA is that you could potentially maximize your value if you invested your whole $5,220 in a single day rather than spreading it out over five years.

Take December 18th 2017. If you started a DCA on that day, you'd have pretty lousy timing. But, sticking with our $20 a week formula, you'd still end up with $17,579 today, a pretty fantastic return on $3,800 in only four and a half years. But if you'd put the whole $3,800 in? You'd have $7,829. Not quite as much of a return.

That is obviously a cherry picked date, but it illustrates why DCA is beneficial. First off, it makes investing affordable. It's a lot easier to invest $20 a week (or $10 a week, or $100 a week, everyone's boat is different) than it is to invest $5,220 (or $2,610 or $26,100).

Secondly, it shields us from the downside of buying high:

Most people start investing in an asset like BTC on its way down, attracted by the ATH that allowed us to find out about it in the first place. If you're a new investor reacting to FOMO, but realize that you want to continue investing long term in an asset you believe in, DCA makes it a lot less painful.

Anyway, just some food for thought. I found it interesting to see what DCA can look like, and has looked like over time, and how a DCA strategy fit into the different bitcoin markets.