Investing
Crypto DCA: What Dollar-Cost Averaging Means
Dollar-cost averaging (DCA) means buying a fixed dollar amount on a regular schedule, whatever the price. Lower prices buy more units and higher prices buy fewer, which shapes your average entry price.
5 min read
All prices below are illustrative examples, not current market data.
How recurring purchases work
Pick an amount and a schedule — say $100 every month. Each purchase buys amount ÷ price units. Over time you build a position at a blend of prices instead of a single entry point.
Units bought each time = Amount ÷ Price Average entry price = Total invested ÷ Total units Value = Total units × Current price
Worked example
| Month | Price | Amount | Units bought |
|---|---|---|---|
| 1 | $20 | $100 | 5.0000 |
| 2 | $16 | $100 | 6.2500 |
| 3 | $12 | $100 | 8.3333 |
| 4 | $15 | $100 | 6.6667 |
| 5 | $18 | $100 | 5.5556 |
| 6 | $22 | $100 | 4.5455 |
Worked example
Results after six months
- Total invested = $600; total units ≈ 36.351
- Average entry price = 600 ÷ 36.351 ≈ $16.51
- Value at $22 ≈ 36.351 × 22 ≈ $799.72
The average entry ($16.51) is lower than the simple average of the six prices ($17.17) because more units were bought at low prices.
If the same $600 had been invested all at once in month 1 at $20, it would have bought 30 units, worth $660 at $22. In a market that rose steadily from month 1, a lump sum would have done better. The outcome depends entirely on the price path.
Advantages
- Removes the need to pick a single entry point.
- Fits regular income — a set amount each paycheck.
- Reduces the effect of any one bad entry on the overall position.
Limitations
- If the price keeps falling, DCA still loses money — just gradually.
- In a steadily rising market, investing earlier often ends with more.
- Each purchase may carry a fee, which matters with small amounts.
Volatile markets and fees
Crypto's large price swings make the gap between the average price and your average cost bigger than in calmer markets. But frequent small purchases can be expensive: a $1 flat fee on a $25 buy is 4% of the purchase. Check whether your platform charges percentage or flat fees, and factor them into the amount that actually buys coins.
How to use the Crypto DCA Calculator
- Open the Crypto DCA Calculator.
- Enter the amount per purchase and list the prices for each period.
- Optionally enter a current price to value the position.
- Press Calculate to see total invested, units, average cost and value.
For a projection at a hypothetical growth rate instead of specific prices, try the Crypto Investment Calculator.
Run your own numbers
Calculate average cost and value for regular purchases at prices you enter.
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