Newbie to stacker news here. I've been stacking sats for just over 3 years. Just bitcoin - not lost any of it, never owned any alts, but nonetheless, it's been a long bear market!
It struck me the other day that despite DCA-ing consistently, I have still managed to underperform the 3 year moving average Bitcoin price. This is due to making some lump sum buys in 2021 and 2022. These weren't even necessarily at the height of the bull market - mainly at low to mid 40s, mid 30s, but still at prices that sit above the 3 year average now.
Now I get that everyone is going to make the odd lump sum buy vs DCA - and that's fine. But let's take an example where you solely have a consistent weekly income stream available to cost average - this is why I think it's so hard to outperform it.
The crux is you're then looking for a period where bitcoin is "expensive", and are going to save some of your weekly buys until a point where bitcoin is "cheap". You then need a way of ascertaining this.
Let's say you try a simple rule - save up when the mayer multiple is over 1.5, and spend this later when it's under 1. (The mayer multiple is the price of bitcoin divided by its 200 day moving average). This would have produced plenty of good feeling results over the years. There are obviously thousands more variations of example - but they all suffer the same issue.
Here's the problem. With that money on the sideline, you're short Bitcoin in that respect, and even when the indicator comes, you don't know how long it will be there for or how much lower it will go. All of these systems will be a bit like making lots of odds on bets - you might win most of them, but they'll be the odd time when you get absolutely creamed. In my example above that method would have stopped you buying bitcoin at some point of the autumn in 2020 (say 16k), but then encourage you back in at 40k the following summer of 2021.
In this example trying to outperform a regular DCA, the moment you keep some of that money on the sidelines you're short Bitcoin. Don't be short Bitcoin.
Let me know your thoughts!