DO YOU BUY ASSETS USING DCA LIKE THIS?DO YOU BUY ASSETS USING DCA LIKE THIS?
First, you can see that OP (case study) entered a downtrend after hitting its peak on the monthly (M) timeframe around the $4 price zone.
Uptrend period: from 2022 to 2024
Downtrend period: from 2024 to now (no clear sign of the decline stopping or accumulation yet)
With a DCA (Dollar-Cost Averaging) strategy, you’d definitely be buying on the right side of the chart, meaning the price decline zone. "No buying in the red, so what’s there to sell in the green?" This means that during the price drop, you’d use certain tools to "justify buying," like a trendline forming during the decline, a support level below, or on-chain data showing buyers starting to dominate, and so on.
And surely, you’d end up buying a lot in the $1.6–$2.3 range because that’s where you’d see those "solid" signals you thought of earlier. Unfortunately, the price kept dropping below $1, then $0.9, and now it’s at $0.7… and it’s still going lower. At this point, you’ve run out of funds to keep DCA-ing into OP.
Have you ever stopped to ask yourself: Why is the price dropping like this? Where’s that "solid" trendline? Where’s the "strong" support? Where did all those buyers from the on-chain data go?
Now, let’s move to a hypothetical scenario:
First, let’s say you bought at the right price, like $0.7, and at this point, the price stops dropping.
But it’s not until 2027 that OP starts a new uptrend wave on the monthly (M) timeframe.
Condition (1) means you got the price right, but condition (2) hasn’t happened yet. Your asset might be at a good price, but the timing isn’t right. You’d have to hold this asset until 2027, as per this hypothetical situation, for it to actually turn a profit.
That means for the next two years, your capital just sits there quietly. Even if the broader market enters an uptrend, your asset stays flat.
So, you’re not losing in terms of asset value, but you’re losing in terms of opportunity cost—wasting time on it.
Whether this hypothetical scenario comes true or not, it’s just an illustration of how I’d approach this kind of problem for you all.
Read it, feel it, and share your thoughts if you find it helpful, okay?
Wishing you a peaceful weekend with your family!
