The least risky way to invest in bitcoin is called “DCA”, for “Dollar Cost Average”. But are there times that are more auspicious than others?
The DCA of good fathers
DCA means investing through small, recurring purchases. This allows you to spread an investment over time to avoid buying at the highest price. This approach is crucial for a volatile asset like Bitcoin.
This allows you to smooth your entry point and not give in to FOMO (Fear of Missing Out) and place all your savings at the wrong time.
This also allows you not to waste time trying to anticipate the market. As Michael Saylor says:
“Over the course of a year, 85% of the performance of the S&P500 index occurs in a single day. And 100% in just 36 hours. […] Trading is a sign of intellectual inferiority. »
But is there a best day of the week or best day of the month to DCA on bitcoin?
Furthermore, is there a better frequency for DCA? In short, is it better to set up a daily, weekly or monthly DCA?
The River company looked into the question:
What time to place your DCA?
River reviewed the price performance of bitcoin over the past 13 years. The statistics for daily lows and highs over these 4,860 days show a clear trend.
The highest daily price occurs within a 4-hour window 38.5% of the time. Between 5 p.m. and 9 p.m. in New York (add six hours for Paris time).
However, it turns out that the lowest daily price also occurs within this 4-hour window 39.4% of the time.
In the United States, the chances of getting the highest and lowest daily prices are highest in the early evening. For Europe it’s around midnight and for much of Asia it’s early morning.
In short, in the long term, it is not really possible to adjust your DCA by targeting a particular time of day. That said, it is more likely to catch the dip in this window during a bear market.
What time to place your DCA (analysis over one year)
The above analysis was carried out over the last 13 years. However, the statistics differ if we only study the last 12 months, from November 2022 to October 2023:
We see that instead of a four-hour window, a single hour mostly stands out. This window represents 14.75% of the highs and 15.03% of the lows.
We also notice that there are significantly fewer lowers than higher highs from noon to 1 p.m. (NY time). This corresponds to 5 p.m. London time and 4 p.m. Paris time.
So this is an interesting time for a daily DCA. The probability of buying the daily low is 6.28%, compared to a probability of 1.91% of buying the high.
A clear trend also emerges when analyzing the weekly highs and lows. Since 2010, it is on Monday that the probability of obtaining the lowest price of the week is highest compared to the highest price. This trend has been confirmed over the last 12 months.
We observe that Friday is also a more advantageous day than average for placing your DCA.
The monthly analysis also reveals that it is better to avoid the last three days of each month in favor of the first two days.
Bitcoin DCA – Conclusion
DCA gives different results depending on whether it is a bull market, a bear market or a relatively stable market. This is probably the most important parameter. Windows that are traditionally more volatile are to be preferred in bear markets, and vice versa.
There are therefore some interesting trends that could allow you to grab a few sats. But remember that the main advantages of DCA are:
-Prevent novices from betting everything as high as possible by giving in to FOMO
-Reduce to nothing the time wasted in front of the bitcoin price curve trying to beat the market.
Don’t trade, just hold!
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