Bitcoin Investing — All-in vs. Dollar Cost Averaging

Bitcoin Investing Investments
Purchase Dates All-in Earnings calculated from purchase date Dollar Cost Averaging Earnings calculated from purchase date
5/18/2017 $22,644 $83,580 $1,887 $0
6/18/2017 $29,304 $68,068 $2,664 $2,276
7/18/2017 $22,440 $66,080 $2,244 $4,530
8/18/2017 $38,844 $40,824 $4,316 $8,333
9/18/2017 $32,136 $38,680 $4,017 $12,102
10/18/2017 $39,165 $22,799 $5,595 $17,269
11/18/2017 $47,058 $6,054 $7,843 $24,485
12/18/2017 $94,800 -$50,540 $18,960 $41,585
1/18/2018 $44,564 -$9,156 $11,141 $52,148
2/18/2018 $33,276 -$6,720 $11,092 $62,783
3/18/2018 $15,724 $1,980 $7,862 $70,565
4/18/2018 $8,163 $689 $8,163 $78,635
$7,148.67 = AVG
April 22, 2018 $8,852

If you believe, as I do, that Bitcoin is here to stay and will be valued in the tens of thousands of dollars in the not too distant future, then the only problem is considering on how to invest.  There are two investment strategies that seem to be favorites of Bitcoin enthusiasts.  The first we’ll call, All-In, meaning just what it says.  Decide how much money you want to invest in Bitcoin and buy that much Bitcoin.  Period.  End of story.  Don’t hesitate.  Don’t wait for lower lows.  Don’t wait.  The second is called Dollar-Cost Averaging.  Decide on an amount that you can invest in Bitcoin on a regular interval and begin to accumulate. Let’s compare the two.

For comparison sake let’s say you invest with the All-in strategy twelve months worth of Bitcoin a year ago.  Bitcoin was selling for $1887 and you would have had to invest $22,644.  It would have earned you $83,580 today; a nice tidy sum.  Had you waited and gone all-in the following month, you would have had to invest $29,304 and it would have earned you $68068 today.  In fact, the longer you waited, the less you would earn.  By December your investments would be in the negative numbers only beginning to look better as an investment now.  Of course, you would have to wait for Bitcoin to reemerge above the $19500 mark before seeing profits.

If you had purchased a Bitcoin each month in a dollar-cost averaging strategy your earnings would have improved each month.  Looking backward, the earlier you started the better off you’d be today.  The strategy even weathered the precipitous fall from December’s highs.  Dollar cost averaging seems to be the better strategy in this case.

Timing is the most difficult aspect of investing.  To be able to predict when to buy and when to sell is almost impossible.  Dollar cost averaging mitigates the need to get your timing right especially with Bitcoin which is, thus far, a totally unknown phenomenon to the investing community.