Basic fundamentals about DCA with bitcoin
742 sats \ 15 comments \ @softglitter2d 13 May bitcoin
Navigating through Stacker, there was a good ser talking about DCA habits and suddenly, other anon replied:
I never understood the DCA mindset. I would rather make a choice to buy whenever I feel comfortable financially. It sporadic depending on my finances. That way I dont have to stress if I have enough money for the money or not. - Stacker News user
Let's try to dissecate and try to give a proper explanation about what are we're seeing here, quoting each part and answering properly. It's not for reprimend and stuff like that, rather it's an opportunity to explain the importance of saving bitcoins.

Point 1: the mindset

The user expressed he doesn't understand the logic behind the strategy, meaning two things:
  1. The user seems to understand what a dollar-cost average is and how it works
  2. The user doesn't find any logic nor reasonable path there.
This is for me a common error with people, trying to find reasonable answers to save money. The ultimate reason is that you don't need to have a proper goal to start saving money: "Savings rescues people from a plight or a pickle. It's preparation for the unknown. It's a way to account for the bad things that may happen."1
You don't need a goal properly to save, meaning that save money (no investing) is to build a fortress before any attack2 is coming towards you.

Point 2: The choices

The user also differ from DCA saying that he would rather something more...rational to his financial motivations. And that's OK, DCA is that: buy something you can afford without compromise your economics. To make a successful DCA, the key goal is to put reasonable amounts in time and space.
You only can save 300 sats today? That's good, very good. You know what is worse? Zero.

Point 3: The opportunity

Saving bitcoin...wow. We have so much literature for that, so instead of giving a new argument about it, I'll give you some posts with compelling arguments about saving bitcoin. Here some writings of my own:

Here some post about others about DCA

Well, that's it. My NFA is always stack sats and be happy.

Footnotes

  1. #343963 ↩
  2. We say it won't happen but it does. That's already known as black swam events ↩
write
preview
related posts
25 sats \ 1 reply \ @cryotosensei 13 May
I don’t usually read SN before I sleep. I’m glad I break my habit tonight.
I enjoyed how you dissected each point bit by bit. Thanks for the thought-provoking post
reply
0 sats \ 0 replies \ @softglitter2d OP 15 May
It's my pleasure ser Please, stack sats and enjoy life, it's beautiful
reply
20 sats \ 0 replies \ @CarlBMenger 22 May
Great article! 🔥
reply
31 sats \ 7 replies \ @Undisciplined 13 May
One of the keys to doing DCA is keeping the amount small enough that you don't have to worry about having sufficient funds.
You can still do ad hoc purchses, as your finances allow or as exchange rates become more favorable.
DCA's value is that it is a very efficient way to accumulate an asset that requires almost no thought.
reply
52 sats \ 3 replies \ @freetx 13 May
Another useful strategy (once you built up a decent stack) is to maintain a Fiat-BTC balanced portfolio (say 95% BTC and 5% Cash).
Monthly re-balance the position. So if BTC goes up, that means selling some to keep the 95-5 in balance. The maxi in us hates the concept, but its what the pros do.
The real long term benefit of this is you will buy all dips. You just need to think of the cash portion as "future dip buying material" to quell the maxi in you.
reply
20 sats \ 2 replies \ @Undisciplined 13 May
I would prefer a balancing strategy that monthly rebalances between Bitcoin and other real assets, like stocks or commodities.
You'll probably have to use fiat as an intermediary in the rebalancing process, but I don't see why you'd want to maintain a specific position in fiat.
reply
31 sats \ 1 reply \ @freetx 13 May
Yes, Gold could work well.
Or another possibility is to choose TIP or other inflation protected fiat bond
reply
0 sats \ 0 replies \ @Bell_curve 22 May
Aqua wallet: bitcoin, liquid and tether
reply
52 sats \ 2 replies \ @cryotosensei 13 May
Yee haw!
When I first started out investing, I contributed $50 monthly to a robo-advisor. No shame in starting small. It’s worse not to have started at all
reply
41 sats \ 1 reply \ @Undisciplined 13 May
Yep. Slow is smooth and smooth is fast.
reply
41 sats \ 0 replies \ @cryotosensei 14 May
I think this platitude will stay in my mind for a while!
reply
10 sats \ 0 replies \ @Coinsreporter 13 May
Initially, I started with $100 and it's been increasing ever since. The key point is be consistent. Never miss. The amount depends on your finances. This is also some freedom that Bitcoin provides.
reply
0 sats \ 2 replies \ @Bell_curve 13 May
@teemupleb wrote a great post about DCA a few months ago
Hopefully he can provide a link 🔗
reply
10 sats \ 1 reply \ @teemupleb 13 May
I think you remember wrong. It was someone else.
reply
0 sats \ 0 replies \ @Bell_curve 13 May
I think it was about boltz liquid and jade
How to buy without KYC?
reply