Claudio Koller ยท 11/23/2022

What does Dollar Cost Averaging or DCA mean?

Dollar-Cost Averaging (DCA) is a long-term investment strategy in which a person divides the total amount to be invested into regular partial purchases. With this strategy, it is possible to escape the high price fluctuations in the long term and reduce the investment risk.

Long term Investing with Bitcoin

Bitcoin is considered by many people to be an asset with a long-term future. For this reason, they regularly buy Bitcoin just as others regularly deposit into a securities account. Through such a DCA strategy, Bitcoin can be well included in a diversified financial portfolio.

For people who want to invest in Bitcoin for the long term, it is recommended to do so with a hardware wallet. A hardware wallet is one of the safest ways to store Bitcoin.

How do I set up a DCA Strategy?

With Pocket, you can conveniently set up a DCA strategy directly from your eBanking to your desired hardware wallet. Simply set up a standing order to transfer an amount to Pocket either weekly, bi-weekly or monthly. Once the money reaches us, we will automatically buy Bitcoin for you and transfer them to your wallet.

Simple and Flexible

A DCA strategy is convenient and time-saving. Once you create a standing order, you automatically buy at the preset time. You don't need to constantly watch the price. You can adjust your strategy at any time, for example by increasing or decreasing the amount in the standing order. You can also easily pause the standing order, suspend it for a month or terminate it and restart it at a later time.

What are the Advantages of DCA?

Especially with an asset as volatile as Bitcoin, this is a popular and relatively simple investment strategy to escape the huge price fluctuations. At the same time, you benefit from Bitcoin's long-term trend.

Good for Bitcoin Newbies

Especially for people who are new to the financial market and making their first investments, this strategy is a good way to try Bitcoin. They are not yet familiar with the price fluctuations and the DCA method allows them to invest in Bitcoin in small steps and become familiar with the asset. At the same time, the risk is minimized because the invested capital is divided over time. This creates an averaging effect, which over a longer period of time compensates for the high volatility of the asset.

A long term positive Trend

When prices rise, you profit with your already invested capital and when prices fall, you get more shares of Bitcoin for the same amount.

Try Swan's DCA calculator to see that regular investment pays off in the long run.

When to buy Bitcoin?

The question "When to buy Bitcoin?" is asked by many people before they invest in Bitcoin for the first time. Very few people investing in financial assets manage to outperform the market with targeted individual purchases. Most trade emotionally and execute many trades, which ultimately often leads to losses. In addition, active investing is very time-consuming.

Buy the Dip

Basically, however, most people who invest in Bitcoin act countercyclically and buy (after) every (major) setback.

Be fearful when the world is greedy and be greedy when the world is fearful.

Warren Buffett

What does countercyclical mean?

Investors act countercyclically on the capital market by behaving in exactly the opposite way to the general market in their buying behavior. This means that they buy an asset when its price has just fallen and is therefore "cheaper".

Much like the motto, "Buy when everyone else is selling, sell when everyone else is buying."

Holding trumps Speculating

If you have a longer investment horizon and want to invest in the digital asset for the long term, the easiest method is to set up a DCA order with the desired time interval. Thus, you reduce your investment risk.

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