Lump sum (LS): one initial all-in purchase
Dollar cost averaging (DCA): even purchases made over a period of time
LS is a much better #bitcoin savings strategy compared to DCA.
The following analysis calculates the returns of each strategy across multiple time periods.
The longer the time period, the more likely LS will outperform a daily DCA strategy. In general, LS outperforms on up swings and DCA outperforms on down swings. Over the 3 & 4-year periods, the only time DCA outperforms is near cycle tops!
🟠: Lump Sum > DCA
🟢: DCA > Lump Sum
https://pbs.twimg.com/media/Fo9CkjcWYBYOyk-?format=jpg&name=large
These figures show the returns for each analyzed period and with varying degrees of an initial LS + daily DCA. The bottom represents a 100% daily DCA strategy and the top represents a 100% LS strategy. The middle would be a 50% initial LS + 50% daily DCA strategy.
https://pbs.twimg.com/media/Fo9C7vTWYA4GFQY?format=jpg&name=large
https://pbs.twimg.com/media/Fo9C9r_WYA0uUw0?format=jpg&name=large
https://pbs.twimg.com/media/Fo9C-5PWYAUO_Fo?format=jpg&name=large
https://pbs.twimg.com/media/Fo9DAP-WYBwmeyL?format=jpg&name=large
Over all time periods, the median return of the LS strategy is much greater than the median return of the daily DCA strategy. The longer the time period, the more pronounced this difference becomes.
LS is a high risk, higher rewards strategy. DCA is a more conservative strategy.
https://pbs.twimg.com/media/Fo9Dj31XEAA1ksv?format=jpg&name=large
https://pbs.twimg.com/media/Fo9Dp-xWYBIMIhM?format=jpg&name=large
https://pbs.twimg.com/media/Fo9Dqw0WYAIs07c?format=jpg&name=large
https://pbs.twimg.com/media/Fo9DrlxXsAE9jRk?format=jpg&name=large
In summary, the LS strategy consistently outperforms the daily DCA strategy across every analyzed time period and throughout all of #Bitcoin's history.
When saving in #bitcoin, time in the market beats timing the market!
Data source: Glassnode
Sponsors: BTC Times & Satoshi’s Journal
V4V donations gladly accepted! ✌️🍎🍻
https://pbs.twimg.com/media/Fo9J4XjXwAEQpxK?format=jpg&name=medium
w_s_bitcoin / Wicked
npub14u…8ez89
2023-02-16 21:21:32
Author Public Key
npub14uhkst639zvc2trx2nlsvk4yqkjp690zk89keytnzgmq2az0qmnq58ez89Published at
2023-02-16 21:21:32Event JSON
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"content": "Lump sum (LS): one initial all-in purchase\n\nDollar cost averaging (DCA): even purchases made over a period of time\n\nLS is a much better #bitcoin savings strategy compared to DCA.\n\nThe following analysis calculates the returns of each strategy across multiple time periods.\n\nThe longer the time period, the more likely LS will outperform a daily DCA strategy. In general, LS outperforms on up swings and DCA outperforms on down swings. Over the 3 \u0026 4-year periods, the only time DCA outperforms is near cycle tops!\n\n🟠: Lump Sum \u003e DCA\n🟢: DCA \u003e Lump Sum\n\nhttps://pbs.twimg.com/media/Fo9CkjcWYBYOyk-?format=jpg\u0026name=large\n\nThese figures show the returns for each analyzed period and with varying degrees of an initial LS + daily DCA. The bottom represents a 100% daily DCA strategy and the top represents a 100% LS strategy. The middle would be a 50% initial LS + 50% daily DCA strategy.\n\nhttps://pbs.twimg.com/media/Fo9C7vTWYA4GFQY?format=jpg\u0026name=large\nhttps://pbs.twimg.com/media/Fo9C9r_WYA0uUw0?format=jpg\u0026name=large\nhttps://pbs.twimg.com/media/Fo9C-5PWYAUO_Fo?format=jpg\u0026name=large\nhttps://pbs.twimg.com/media/Fo9DAP-WYBwmeyL?format=jpg\u0026name=large\n\nOver all time periods, the median return of the LS strategy is much greater than the median return of the daily DCA strategy. The longer the time period, the more pronounced this difference becomes.\n\nLS is a high risk, higher rewards strategy. DCA is a more conservative strategy.\n\nhttps://pbs.twimg.com/media/Fo9Dj31XEAA1ksv?format=jpg\u0026name=large\nhttps://pbs.twimg.com/media/Fo9Dp-xWYBIMIhM?format=jpg\u0026name=large\nhttps://pbs.twimg.com/media/Fo9Dqw0WYAIs07c?format=jpg\u0026name=large\nhttps://pbs.twimg.com/media/Fo9DrlxXsAE9jRk?format=jpg\u0026name=large\n\nIn summary, the LS strategy consistently outperforms the daily DCA strategy across every analyzed time period and throughout all of #Bitcoin's history.\n\nWhen saving in #bitcoin, time in the market beats timing the market!\n\nData source: Glassnode\n\nSponsors: BTC Times \u0026 Satoshi’s Journal\n \nV4V donations gladly accepted! ✌️🍎🍻\n\nhttps://pbs.twimg.com/media/Fo9J4XjXwAEQpxK?format=jpg\u0026name=medium",
"sig": "6c97df517a63ec330521b90091329332ed4dcbd36dc38f121f2efcc85f20333d56b2f81626ffc47678ec62afa6fc1ef1f081ad29fac93461d8a32aa33a122d32"
}