 | I did this post earlier in the day but I succeeded only in confirming my own bias it seems. I was wanting to prove in favor of the idea of DCAing your investment in response to another post saying it was bad. First off, my math was way wrong, noticing this I decided to alter it to capture the amount in BTC as jack_murray did, this made the accumulation of the value over time much more clear. The way I was doing it trying to determine the value by the USD price bought at, which is wrong and would require more steps to make accurate. Second, after doing it correctly, I saw the pattern he had described in the original post but then it made me want to dig further and confirm it. The logic of
is actually pretty sound. I've redone the graph to show the growth of an hourly $0.50 investment, a biweekly $168 investment, and a quadweekly $336 investment which we will use for monthly as a step up from his logic. I will show the graphs and spare the code this time but it can be viewed right here So this is the graph for the correctly calculated logic for the investments. Here we see the logic of DCAing a smaller sum as often as you can seems to keep up in the initial years, not taking much time for a hourly or biweekly purchase to catch up in value to a quad/monthly investment. The total output for this graph was: However, I took away the initial first half of the data and wanted to see if this still held true if you were not able to buy at the lower prices. That graph shows as follows: 2nd or 3rd Quarter 2016 - 2021 This again shows the same pattern. Initial investments are the same but spread out, it doesn't take too much time for a hourly or biweekly DCA to catch up to the quad/monthly investments. However, after enough time, they start to flatten out and the initial larger investments, less frequently, captures more value over time. The output for this graph was: Much less dramatic in the difference than I expected, nonetheless, it had kept up in its performance. Here is the last graph where I only used the last quarter of the data, and yet, it still holds up. Output: Then I decided, why not really turn up the gas? There has to be a point where the is an investment that is too much at a time, and it will surely start to under-perform compared to a DCA strategy that simply invests less, more often. But then I realized I had been failing to capture the USD value of the investment over this period. Of course you spend more USD you're getting more sats over time. So what was the difference in the fluctuation in price per the investment strategies? That's when what I was looking for showed up Output: Long Term still wins, but cut the time into a fourth and you get: Here we finally see it, and for some reason, the graph looks pretty much the same but there's a connecting line between the first and last points, I am not sure why. What all of this data is saying, or at least as I am interpreting it, it's actually better to save a bit of money and make a larger investment to capture more value over time, but if you want to capture value to turn back into USD, you should DCA hourly. Thank you u/jack_murray for the original post making this a nagging thought in my head the whole day that I had to prove right or wrong, but I don't think I succeeded with either. There was also another user that pointed out the initial purchase was omitted from my last solution, here it would be much more dramatic and important to have that initial purchase, so thank you too for also pointing that out. I deleted the last post because it was just wrong and can't remember your u/ [link] [comments] |
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