DCA

DCA is short for Dollar Cost Averaging. It is a strategy that has grown in popularity when it comes to buying Bitcoin but the principle of it is quite straightforward.

You have a set amount of fiat money that you wish to buy Bitcoin with. Instead of buying Bitcoin in one lump sum, you split it in to smaller amounts and space out your purchases across a certain time frame.

For example, you have $1,000 that you have available. You split this in to 10 x $100 smaller amounts and buy $100 worth of Bitcoin every week for 10 weeks. 

This method of buying is supposed to even out the volatility of Bitcoin’s price so you get an average. There are pros and cons to lump sum so it depends on your risk aversion.

Normally people will then wait for the price to appreciate and then sell at a profit later on.

DCA is not the same as just buying Bitcoin daily as with DCA, you have a set amount with the intention of selling. Buying Bitcoin daily is akin to saving in Bitcoin so the mindset is a little different between the two. 

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