Ethereum's DCA Strategy in 2023 Not Profitable with $100 Weekly Investment
Date: 2023-09-20 Author: Dima Zakharov Categories: BLOCKCHAIN
DCA Strategy: Minimizing Volatility and Psychology
Dollar-cost averaging (DCA) is a method that involves distributing investments by purchasing at specific time intervals and roughly equal amounts, regardless of the price. It's popular among beginners because it minimizes the impact of volatility and psychology on overall investments.
Despite its advantages, DCA has its drawbacks, as this strategy relies on the belief that prices will always rise. Otherwise, investors are guaranteed losses.
DCA's Impact on Ethereum in 2023
If this method is applied to Ethereum in 2023, buying ETH worth $100 every week from January 1st, 2023, to the present at $3800 would have yielded $3618.97, which is 4.76% less than the initial investments.
Cryptanalyst Benjamin Cohen also shared his own calculations, albeit for the period until August 3rd, 2023 (31 weeks), according to which an investor using a weekly DCA strategy of $100 in Ethereum would incur losses of 4.67%.
Weekly Ethereum Investment Chart in 2023
On the other hand, using the same method for Bitcoin (BTC) would have been profitable, ensuring a return on investment of 5.69% as of September 19th, with a DCA cost of $4,016.30 against initial investments of $3,800.
The current price of Ethereum stands at $1627.05, marking a 1.8% decrease over the last 24 hours and a 2.1% increase over the last seven days.
