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Published on 
17 January, 2025

How about DCA?

DCA, short for Dollar Cost Average, is a technique that has been widely used and recommended in recent years to avoid Bitcoin volatility.

Fear of volatility?

Many people are faced with various fears when evaluating whether to buy Bitcoin: "It's late, I can't buy a Bitcoin anymore", "With so much variation in price, I don't know when to buy Bitcoin", "I buy, but what if it goes down?", "I'll wait until it goes down to buy".

These fears have a logical basis, especially for those just learning about Bitcoin.

If we look at the Bitcoin price chart in dollars, it is easier to understand why.

Bitcoin historical price chart in dollars

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Taking 2017 as an example, BTC started at around $700, and by the end of the year, it had reached close to $18,000.

The volatility is even more noticeable if we circumscribe the chart to the last month (December 2024).

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In fact, between the capture of the historical price and that of the month (approximately 1 minute), the price varied by $103.

The uncertainty regarding the price is understandable, so it is appropriate to use the DCA technique.

DCA is a solution

DCA means moving from dollar to bitcoin regularly regardless of the purchase price so that, over time, you buy at an "average" market price.

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This way, you can make small purchases, and you don't worry about whether you are buying expensive or cheap, and you get savings or average investment.

Several tools allow you to do DCA. This time, let's look at Balmy, which allows us to use DOC to buy Bitcoin on the Rootstock (rBTC) network.

Using DOC to do DCA

Balmy is a Decentralized Finance tool that declares itself as a decentralized banking platform. It allows you to send and receive tokens, exchange various tokens on various networks, and make recurring purchases or DCA.

Like any web3 platform, you must connect to your wallet. Then go to Recurring Investments. The platform is initially in English, but you can switch to Spanish using the configuration icon on the top right.

Select the network and the corresponding tokens, and enter the total amount, duration, and periodicity.

The minimum amount for DOC is $5 per day. In a daily purchase strategy for a week, the total amount to enter would be DOC $35.

In the example, 10 DOC will be automatically purchased in rBTC daily for a week.

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To note:

  • You can reverse the example and buy DOC regularly.
  • If you don't have DOC yet, you can mint it on the Money On Chain dApp or swap it with tokens or stablecoins from other networks through platforms like Symbiosis. Check out the options on the Money On Chain Wiki.
  • No transaction costs are paid for each swap. Transaction costs are covered by those who provide the necessary liquidity for these swaps.
  • A 0.6% commission on exchanged funds is applied and shared between the protocol and the liquidity providers.
  • You can cancel recurring purchases (DCA) before the end of the term at no cost.
  • Balmy allows the creation of several recurring investments at the same time.

In short, the DCA technique allows the recurring saving or buying/selling of bitcoin to a stablecoin such as DOC on the Rootstock network. This eliminates the worry of when to sell or buy and frees up time to watch Andres' videos on the Money On Chain YouTube channel.

The following is a video from Money On Chain's YouTube channel where you can see a practical example:

PS: this article is not investment advice. Before making financial decisions, you should do your own research.

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