DCA is a trading strategy that maintains investment through automated small periodic purchases without trying to time every market fluctuation.

There is a clear precedent for scalability: since November 17, 2022, El Salvador has publicly DCA purchased one Bitcoin daily.

However, in an upward trend, a lump-sum investment often outperforms—historically, it has performed better than DCA about two-thirds of the time.

It is best suited for investors who regularly earn fiat income and prefer a stable, rule-based approach rather than impulsive trading.

Dollar-cost averaging (DCA) refers to buying a certain asset at fixed intervals (such as weekly or monthly) with a fixed amount, regardless of price fluctuations.

By spreading out entry times, the risk of making a timing error with a large one-time purchase can be reduced, while achieving an average entry price that aligns with market volatility trends.

Assuming a weekly investment of $10 in Bitcoin. When prices drop, $10 buys more units; when prices rise, fewer units are purchased. Over the long term, these purchases ultimately form a single cost basis.

DCA cannot avoid the drawdown caused by a continuous decline in asset prices. In a consistently rising market, a lump-sum investment typically performs better. DCA can serve as a discipline and automation tool to help stick to an investment plan.

The cryptocurrency market trades around the clock, with significant volatility possible on Sunday nights and Tuesday mornings. In such a continuous market, trying to "time the market" is mostly guesswork, which is why many investors prefer a rule that does not require perfect timing.

DCA provides such a rule: you set the asset, amount, and frequency, and then let the plan handle the rest. The result is stable exposure without needing to react to every market fluctuation.

This also has psychological benefits. A simple preset program helps curb the fear of missing out (FOMO) during panic on rising days and panic on falling days. You no longer react to headlines but stick to the plan.

Setting it up is also simple. Most major exchanges and wallets now offer regular purchase or "automatic investment" options: just select your cryptocurrency, choose a weekly or monthly plan, and let the orders run automatically.

For anyone building positions from regular income (such as salary, freelance income, or side jobs), DCA can fit well into daily finances. It also maintains calmness and repeatability in decision-making.

Did you know? Fundstrat analysis indicates that missing just the 10 best trading days of Bitcoin in a year could wipe out most or all of that year's gains. Perfect timing is not only hard to achieve but also costly.

Real-world case: El Salvador adopted Bitcoin as legal tender in 2021 and chose to accumulate steadily rather than make large bets. On November 17, 2022, President Nayib Bukele set a simple rule: buy one Bitcoin daily—a transparent and verifiable operation process.

There were also symbolic increases. On "Bitcoin Day" in September 2025, Bukele announced the purchase of 21 Bitcoins, bringing the disclosed reserves to about 6,313 Bitcoins.

Additionally, not all coins come from the market; it was reported that geothermal mining contributed about 474 Bitcoins over three years (though the energy scale is small, the quantity is still considerable).

How effective is it? During the market rise from late 2024 to mid-2025, media estimates indicated unrealized gains of about $300 million by December 2024, with the portfolio's market value rising to over $700 million months later, meaning peak profits reached hundreds of millions. Specific figures vary with price changes, but the pattern during the rise is very clear: disciplined buying accumulated a substantial position.

Indeed, simple and reusable rules can serve as policy signals and as operational habits for long-term accumulation.

Did you know? Strategy (formerly MicroStrategy) has become the largest corporate holder of Bitcoin, reporting holdings of 640,000 Bitcoins as of late September/early October 2025—a story of institutional-scale, rule-driven accumulation.

Even with high-profile cases, DCA is not without its drawbacks. The main one is opportunity cost. In a rising market, a lump-sum investment is often superior because more capital can benefit from the increase sooner. Research in the stock field shows that lump-sum investments outperform DCA about two-thirds of the time, and the same logic applies to cryptocurrencies.

Next is fees and friction. Multiple small purchases can increase overall costs. Platforms often charge spreads in addition to clear trading fees, and on-chain transfers also involve network fees. If transaction fees are unfavorable for small orders, reducing frequency and increasing the amount per transaction may be more efficient.

There are also execution and platform risks. Orders depend on the timely arrival of funds and smooth automation processes, so failures or delays can disrupt plans. Using centralized platforms also poses operational, legal, and security risks, and the method of asset custody should be chosen carefully.

Behavior is also important. If the asset being dollar-cost averaged continues to decline, losses will still occur; in a strong bull market, DCA typically underperforms compared to lump-sum investments.

Finally, there are management and tax considerations: frequent purchases will create multiple batches that need tracking. For example, the UK tax authority (HMRC) requires strict record-keeping of asset pools. Please consult local tax guidelines before enabling "automatic investment."

Did you know? Network fees are not constant. During significant events (such as the 2024 halving and token issuance frenzy), on-chain fees have spiked significantly even when prices were stable, making regular on-chain transfer costs higher during peak periods.

DCA is suitable for investors who wish to maintain market exposure without frequently timing the market. If you are a beginner, have limited time, or prefer a stable process, fixed automatic purchases can help you hold your position amid volatility.

For those primarily earning fiat income who can regularly set aside small amounts rather than making large one-time investments, the advantages of DCA are particularly evident. The real benefit lies in the behavioral aspect: replacing impulse with habit, eliminating repeated hesitation.

However, it is not suitable for everyone. If you have a large amount of cash and a higher risk tolerance, historical data shows that lump-sum investments typically perform better in rising markets. If your style leans towards short-term trading around market events, a slow, calendar-based automatic buying strategy may not be appropriate.

Some principles to consider: choose an amount that you can continue to invest even if the market pulls back; check fees and spreads before automating operations—if the cost of small purchases is high, reduce frequency and increase the amount per transaction; plan in advance how to take profits, rebalance, or exit (which can be based on time, target allocation, or goal achievement); and establish a clear custody plan, whether choosing an exchange, broker, or self-custody wallet, ensuring basic security measures are in place.

DCA is a discipline tool centered on simplicity and continuity. Whether it is suitable for you depends on your cash flow, risk preference, and the importance you place on stable, rule-based processes.

Related: Analysts say "Uptober" is still expected to materialize after last week's significant liquidation event.

Original article: “From $10 to $10,000: How Dollar-Cost Averaging Works in the Cryptocurrency Space”

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