What is DCA (dollar-cost averaging)?

How many times have you looked at a chart and thought “I’ll wait a bit longer”? DCA, short for dollar-cost averaging, replaces that decision with a preset schedule. Despite its name, it works with euros too, not just dollars.

Think of someone who puts €100 into the same cryptocurrency every month. When the price is €10, they get 10 units. If the price has dropped to €5 by the next purchase, the same money buys 20 units. In total they have spent €200 on 30 units, so the average cost is about €6.67 per unit, excluding fees.

It’s like filling up your car with €50 of fuel each time: when the price drops, you get more liters. With DCA, the purchase amount stays fixed, not the number of coins. The schedule can be carried out manually or through recurring buys on a platform that supports them.

Why it matters

The purchases are spread across different points in time, so your overall position doesn’t depend on a single entry price. A preset schedule can also limit decisions driven by fear or excitement. We think this discipline is its key feature, not any promise of better returns.

If the price keeps rising, a single lump-sum purchase at the start may perform better. If it falls, later purchases lower the average cost, but the overall position may still be at a loss. DCA isn’t the same as “buying the dip”: in the latter, the drop is the trigger, while with DCA you follow the calendar.

What to watch out for

DCA doesn’t protect you from a failed project, nor does it replace portfolio diversification. Repeated purchases of the same coin still concentrate your risk in it.

Small, frequent trades also require keeping an eye on costs: fees and the difference between the buy and sell price (spread) can eat into the result. A buying schedule is no substitute for checking the cryptocurrency itself or the platform that holds it.