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Comparing DCA vs Lump-sum investment strategies using historical BTC data

In this post, I’ll be comparing DCA and lump-sum investment strategies on the historic price data of BTC using the BLX ticker. This is a follow-up to this [post](https://www.reddit.com/r/CryptoCurrency/comments/lsa2vc/finding_the_optimal_dollarcostaveraging_time_dca/) where I simulated different DCA time intervals that yielded the highest return. User u/JauntyTurtle suggested a method of comparing DCA vs lump-sum where you make a lump-sum investment of **N** dollars on day **X**, then starting day **X** you DCA **Y** dollars each day until the total amount of money used with DCA equals to **N**. Then we compare which was able to give us a higher BTC position. We perform this simulation for as much data available as possible, and in the end, get a percentage of times where DCA yielded a superior investment to lump-sum investment. The following parameters were chosen for the simulation

N = $1000

Y = amount invested each day with the DCA strategy was $10, $20, $50, $100, and $200. This means a simulation using $10 will DCA 100 days into the future, and $200 will simulate 5 days.

Disclaimer: Obviously past performance does not indicate future results, but I still think things like this are interesting. I also don’t have any background in finance or quantitative analysis, I just like to do this stuff for fun.

# Results

|#of days DCA into future|DCA wins % of times|Lump-sum wins % of times|
|:-|:-|:-|
|100|35.93|64.07|
|50|38.75|61.25|
|20|41.57|58.43|
|10|42.60|57.4|
|5|43.61|56.39|

According to the simulation, DCA loses in all cases to lump-sum investing. This isn’t really surprising when looking at the BTC/USD log chart as bitcoin has been the best performing asset of the past decade. There is simply more green than red days in bitcoins 12-year history. Blue dont on the graph show day when DCA was superior and red when lump-sum

​

https://preview.redd.it/kk417zw7rfk61.jpg?width=611&format=pjpg&auto=webp&s=1bd4b292b5653586ad27d40d62690b87d9d0edb2

# Conclusion

The results may suggest that Lump-sum investment has been the superior strategy compared to DCA when it comes to investing in Bitcoin. This seems surprising as DCA is regarded as the best method by most, what do you think? The graph shows clearly that DCA is superior in downtrends while lump-sum is better in uptrends. Obviously, the issue is realizing where you are in the current moment, so perhaps DCA should still be the preferred strategy for the majority of people as it’s simple and still effective. I cannot guarantee that the simulation code is 100% correct, but its public and available [here](https://github.com/Mephistoss/DCA-VS-Lump-sum-comparison-BTC). This is also probably not the best method, let me know if you can think of something better in the comments.

​

Edit:

I did some more simulations on ETH/USD, ETH/BTC, ADA/USD, and ADA/BTC ratios.

ETH/USD

DCA superior 44.54% of times

​

https://preview.redd.it/ux5xfr3s8gk61.jpg?width=750&format=pjpg&auto=webp&s=7f87307b36078d538cd92eca124872feb88f38f5

ETH/BTC

DCA superior 54.88% of times

https://preview.redd.it/sd2vgdf78gk61.jpg?width=683&format=pjpg&auto=webp&s=769536c8be260b7e0792b0ec20cd70ea0b6d2c49

ADA/USD

DCA superior 50.17% of times

​

https://preview.redd.it/7v4stmyq8gk61.jpg?width=735&format=pjpg&auto=webp&s=2d3f1ee61eedc7c25b57d41cd8d054808d92dfcc

ADA/BTC

DCA superior 54.83% of times

https://preview.redd.it/uouq2h3g7gk61.jpg?width=749&format=pjpg&auto=webp&s=b7f5cffa2d71be6b0e8b265b2f3d684135ce2145



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8 Comments

  1. That’s interesting actually. It does make sense that dumping more money in early works out when something is growing and increasing in price month by month

    Thanks for doing this!

  2. **Bitcoin(BTC) Basic Info:** [Website](https://bitcoin.org) – r/Bitcoin – [Abstract](https://www.reddit.com/r/CryptoWikis/wiki/Bitcoin_basicinfo#wiki_short_description) – [History](https://www.reddit.com/r/CryptoWikis/wiki/Bitcoin_basicinfo#wiki_history) – [Exchanges](https://www.reddit.com/r/CryptoWikis/wiki/Bitcoin_basicinfo#wiki_exchanges) – [Wallets](https://www.reddit.com/r/CryptoWikis/wiki/Bitcoin_basicinfo#wiki_wallets)

    **Biases(Updated July, 2019):** [Arguments For](https://www.reddit.com/r/CryptoWikis/wiki/Bitcoin_pros) & [Arguments Against](https://www.reddit.com/r/CryptoWikis/wiki/Bitcoin_cons) | **CryptoWikis:** [Policy](https://www.reddit.com/r/CryptoCurrency/wiki/policy#wiki_cryptowikis_program_-_.28work_in_progress.29) – [Contribute](https://www.reddit.com/r/CryptoWikis/wiki/contributing)

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  3. It’s some interesting data, but as you’ve mentioned. This is largely due to the short amount of time Bitcoin has been around and the fact that it’s consistently grown.

  4. Very cool, thanks for sharing!

    Overall, it’s easier to see based on historical data where to lump sum is advantageous, but the reason I like DCA is because I’m accepting the fact that I don’t know where the price is going to go. Much less stress trying to time my buys.

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