| operations | | 0. | | 0. | comment |
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| 1. | | parent_author | "" |
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| parent_permlink | hive-167922 |
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| author | cryptominaty |
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| permlink | which-bitcoin-strategy-works-best-regardless-of-price |
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| title | "Which Bitcoin Strategy Works Best Regardless of Price?" |
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| body | "Bitcoin (BTC) is down by more than 55% six months after hitting its all-time high of $69,000 in November 2021.
[Source](https://www.pointium.org/wp-content/uploads/2021/03/Bitcoin-Trading-strategy-Easy-Steps-to-Gain-Profit-1024x576.jpg)
The massive drop has left investors in a bind as to whether they should buy BTC when it is cheaper, around $30,000, or wait for another market sell-off.
This is mainly because interest rates are lower despite the Federal Reserve's recent 0.5% rate hike. Meanwhile, cash holdings among global fund managers have risen 6.1% to $83 billion, the highest level since the 9/11 attacks. This suggests risk aversion among the largest pension, insurance, asset and hedge fund managers, according to the latest Bank of America report. data sample.
Many crypto analysts, including Carl B. Menger, see increased buying opportunities in the Bitcoin market as its price looks for a bottom.
But instead of suggesting a lump sum investment (LSI), in which investors throw up a large sum to enter a market, there is an apparently safer alternative for the lay investor, called “dollar cost averaging” or DCA.😌
Bitcoin DCA strategy can beat 99.9% of all asset managers
The DCA strategy is where investors divide their cash holdings into twelve equal parts and buy Bitcoin with each part each month. In other words, investors buy more BTC when its prices go down and less of the same asset when its prices go up.
The strategy has so far provided incredible results.
For example, a dollar invested in Bitcoin every month after it peaked in December 2017 (about $20,000) has given investors a cumulative return of $163, according to CryptoHead's DCA calculator. That means a profit of around 200% on constant investments.
The Bitcoin DCA strategy also stems from the view that the long-term trend of BTC would always remain biased to the upside. Menger claims that regularly buying Bitcoin for a certain dollar amount could see investors “beat 99.99% of all investment managers and companies on planet Earth.”
Cracks in the DCA strategy
However, historical returns in traditional markets do not support DCA as the best investment strategy. Instead, the LSI strategy proves to be better.
> For example, a study of 60/40 portfolios from Vanguard, which looked at each 12-month time frame from 1926 to 2015, showed that one-time investments outperformed DCA two-thirds of the time, averaging 2.4% in a calendar year.
This somewhat raises the possibility that Bitcoin, whose daily positive correlation with the benchmark S&P 500 index increased to 0.96 in May, will show similar results between its DCA and LSI strategies going forward.
Therefore, regularly investing in Bitcoin with a fixed cash amount may not always lead to better returns than the all-in method.
[Source INFO](https://criptomundo.news/que-estrategia-de-bitcoin-funciona-mejor-independientemente-del-precio/)
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