No DCAing ISN’T Overhyped – With Supporting Evidence

There was a post on this sub earlier about how DCAing is a bad long-term strategy. The argument was based around the idea that the market tends to go up and that by DCAing you tend to miss out on gains.

The rationale of such an argument is fairly interesting, if a little naïve. I thought I would make a post to rebuke such a claim.

**Argument 1: Risk/Return Relationship**

DCAing may miss out on absolute gains, sure. However, by investing over time, one minimises one’s volatility. If the market goes down, the dip is bought, reducing average price. If the market goes up, the investor participates in some of the gains.

DCAing is not so much about maximising your returns, but about reducing the chance of you losing money. Lump summing is trying to time the market and could easily lead to you bag-holding.

Investing is all about risk/returns, not just returns. If I offered you a chance of winning $1 million on a coin flip, but you had to pay $1 billion to enter, you wouldn’t take it, even though the payoff would be huge. This is because the risk/return relationship is off.

**Argument 2: Risk Profiles of Investors**

The argument against DCAing relies on investors a) being willing to lose money b) having the time available to wait for the market to return to previous levels.

Sure, lump summing is not too risky for someone in their early twenties with no dependents. However, this is just not true for the elderly (who can’t bank on waiting 5+ years for the market to go up again), or those with kids etc who have many bills to pay.

**Argument 3: The market goes up over time, but not necessarily an individual coin**

The market will eventually reach new highs, I believe in that. However, that does not mean that the individual coin you are buying will reach new highs. [Look at this snapshot of 2017]( a lot of the coins here have fallen since then, or don’t even exist today.

Lump summing advice perhaps works better for ‘sure-fire’ investments like ETH and BTC. If you’re just buying a few individual altcoins, perhaps DCAing is a better method.

**Argument 4: Bitcoin has already 7x since March 2020.**

Bitcoin has 7x since March. The market may go up from here, but you’re buying at quite a high price currently. The chance of it going down further from here is still quite high. Lump summing greatly increases this risk – even more for altcoins.

**Argument 5: Empirical Evidence**

\- [Dubil finds that DCAing reduces risk.](

\- [Brennan et al found that DCAing has great power in markets with mean reversion](

\- [Smith and Artigue find that DCAing is an imperfect decision, but does help diversifying individual decision risk](

\- [Grable et al finds that lump summing should mainly be used at the beginning of a bull run or just before one starts](

These papers do all talk about the stock market, rather than crypto, unfortunately. However, I believe that the extra volatility in crypto will just reinforce the point of the papers. You could be investing at a coins ATH or at a specific point in a bull run. Thus, DCAing is a useful tool for investors to reduce risk.

**Tl;dr DCAing does have great value through reducing risk.**

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19 thoughts on “No DCAing ISN’T Overhyped – With Supporting Evidence”

  1. This is evidence that it is effective, not that it isn’t overhyped.

    Something can be both effective *and* overhyped.

    When it comes to investing, the *only* rule is you do you.

  2. Not going to bother reading through your post because the topic is bullshit. All investing is risk and speculation. If you DCA in the wrong investment you lose. If you DCA in the right investment you win.

    When someone actually predicts the market and the right and wrong investments I will change my mind.

  3. I have a question though. In times likes these when the dip is absolutely dipping, isn’t it better to invest a set amount (a larger amount) at once. Instead of dca’ing small amounts like over a couple of weeks when everything could be expensive again? Beginner here so sorry if it sounds dumb

  4. The issue is that no one dca. Crypto investors put all their money during the bull market and then “dca” with much smaller amount during the bear market.

  5. TLDR: DCA works for BTC and ETH. Anything else is much more of a gamble. If you got in at a bad time, your timeframe for seeing profits requires longer periods of DCA.

  6. Who’s even saying it’s overhyped? More than 3/4 of this sub are idiots who don’t know what they are doing, so we just stick to DCA, hold, and chill.

  7. I don’t have the liquidity to buy in one big chunk.
    So I DCA every pay day.

    Oh yeah sure I could set my dca amount aside and invest when I have a nice stack. But I feel I could miss out on the current dip.

    It’s all speculation.

  8. Seems to me the whole idea with DCA is no one has any idea what the “true” price *should* be (why we have markets) at any point in time so you never really know until afterwards whether a movement was a dip, a correction, the start of a breakout, etc. This is true even over a period of just minutes so even if you *could* watch the charts all day you still don’t know enough to time the market exactly. So the strategy is just catch the rising wave over time since you know that over the long run prices are rising and you reduce your fees by not trading as frequently.

    You generally won’t DCA if you have a windfall. Like if you hit lotto for $100k, you wouldn’t want to wait and invest $50 a week to reduce risk, since the market is (generally) rising.

    Not investment advice, yadda yadda.


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