Recently, we have been hearing and reading about DCA and DCA services.
This article will briefly explain what these three letters are all about and why they might be relevant to you.

DCA stands for dollar-cost averaging and is also known as the "average cost effect" or "savings plan". DCA is an investment strategy in which an investor divides the total amount to be invested into periodic purchases in order to reduce the impact of volatility on the total purchase. The purchases are made independently of the price of the coin or token and at regular intervals. In effect, this strategy eliminates much of the work of trying to time the market to make its purchases at the best prices. Especially in a market as volatile as the cryptocurrency market, this is a proven approach to avoid the enormous price fluctuations.
By taking advantage of the average cost effect, you rarely catch the best possible price within a time period to buy a coin/token, but you are also very likely to avoid buying at the worst possible time. There is also an old saying that is often used in traditional financial markets: "Time in the market, beats timing the market!", i.e. "it's how long you are part of the market that matters, not when exactly you enter".
If you constantly buy the cryptocurrency of your choice for a predetermined sum in dollars (or euros in this country) at predetermined times, you buy more of the corresponding coin when the price is low and proportionally less when the price is comparatively high. This - and the fact that the overall market trend is definitely upwards - results in steady growth of the invested capital in the long term.

I would like to briefly illustrate how the DCA strategy affects your investment. Let's assume a time horizon of five months and two people, A and B, who each want to invest €1000 in order to make a maximum profit after this time. In real life, the time horizon for DCA should of course be much longer and is more likely to be years or even decades, but with this short time span it is of course easier to demonstrate and understand.

Person A uses a savings plan and buys Bitcoin for €200 at the beginning of each month instead of a one-off investment of the entire €1000.

At the end of the specified time period, person A would have turned €1000 into a total of 0.1325 BTC with an equivalent value of €2120 using this DCA strategy. Now let's see what options person B has.

Person B can achieve a maximum of 0.25BTC with the chosen strategy with an equivalent value of €4000, BUT only if B was actually lucky enough to have bought at the most favorable time on March 1st. In four out of five cases, B would have made less Bitcoin/Euro and thus less profit with a one-time investment of €1000.

If you also consider the nervous stress that person B had, as he or she could never be sure whether the price would rise or fall in the coming weeks and months, person A's DCA is not only the more successful strategy (in most cases), but also the more relaxed one. Bitcoin is now referred to by many people as a "savings technology", as many people do not expect maximum profits from their investment, but rather a hedge against the threat of inflation.
For these people, dollar-cost averaging is a means of achieving peace of mind. After all, there are more important things in life than maximum profit.

Our savings plan comparison provides a detailed overview of the various DCA services.