Dollar cost averaging reduces the effects of price volatility.
By buying in consistent dollar amounts, you can limit the effect of choppy markets, buying more of your favorite cryptocurrency when prices are lower.
Exchanges like Binance, and Uphold make DCA for crypto easy.
Put your crypto purchases on autopilot, but be mindful of exchange fees that create a sometimes-hidden headwind.
Dollar cost averaging can be a winning strategy in a downturn.
DCA can act as a limited type of insurance, automatically reducing your cost if you didn’t time the entry just right or the market swoons unexpectedly.
Dollar cost averaging takes the guesswork out of crypto purchase timing by automatically buying more when prices are low and buying less when values rise. Several crypto exchanges now offer auto-buy, a tool to leverage dollar cost averaging to build your crypto portfolio.
What is a Recurring Buy on a Crypto Exchange?
Recurring buys, sometimes called auto-buy, is just a plain English term for dollar cost averaging. For instance, to build a position in Bitcoin, you can set up an automatic purchase amount that fits your budget, putting your Bitcoin purchases on autopilot.
It’s difficult to get market timing right every time when building a position. Emotion can play a role as well, particularly in the volatile crypto space, leading to trades we might later regret. Recurring buys solve both of these problems by removing you from direct trading. Instead, you choose an asset, an amount you want to invest, and an investment frequency. The exchange takes care of the rest, automatically buying on a recurring schedule you’ve selected.
The result of dollar cost averaging through a crypto exchange is that your average cost will fall when the market prices fall, and vice versa. Consistent auto-buys ensure that your average cost follows the market trend, a feat few investors can accomplish without the discipline of dollar cost averaging.
Dollar Cost Averaging (DCA): Dollar cost averaging refers to investing a fixed amount of capital at regular intervals. For example, you might invest $10 weekly or $500 monthly. The strategy lets you buy more of your chosen investment asset when prices dip while reducing buying quantities when prices rise.
Top Crypto Exchanges For Dollar Cost Averaging
Not all exchanges offer recurring purchases or even automatic deposits. We selected five top picks that make building a position easier through dollar cost averaging.
|Exchange||Fees||Autobuy for US traders||Supported cryptocurrencies||Auto-buy frequency||Minimum or maximum auto-buy|
|Uphold||Debit/Credit:2.49% to 3.99% Spread fee: typically 0.8 to 1.2%||Yes||196, including: BTC ETH LINK XRP||Daily, weekly, or monthly||$1 minimum|
|eToro||Debit/Credit: 0% Spread fee: 1% Conversion fee (non USD deposits: varies Withdrawal fee: $5 (non-US accounts)||Recurring deposits only; manual purchases||26, including: BTC ETH DOGE ALGO||Recurring deposits weekly, every two weeks, or monthly||$10 minimum recurring deposit|
|Binance||Debit card: 3.75% Taker fee: .0750% to .3000% (no fee for BTC)||Yes||130+, including: BTC ETH DOT AVAX SOL||Daily, weekly, Every 1st or 15th, and Monthly||$1 minimum|
From staking to currency conversions to building your stack, Uphold bundles a powerful set of crypto trading tools with an easy-to-use interface. The exchange, founded in 2015, boasts over 200 currencies and services nearly as many countries.
For dollar cost averaging, it doesn’t get much easier than Uphold in the crypto world. However, Uphold’s fees can add up, reducing overall gains. To reduce costs, consider using an ACH bank transfer rather than a credit or debit card.
Uphold does not charge a trading fee for recurring buys, which the exchange calls “autopilot” transactions. However, you’ll pay a spread, which varies by the type of cryptocurrency you’re buying. Expect to pay about 1% for the spread, which refers to the difference between the market cost and your buying cost, although the spread won’t appear on Uphold’s transaction preview.
- User-friendly interface
- 196 cryptocurrencies available
- Daily, weekly, or monthly auto-buy
- 1% average spread
- Funding fees can be high
- Additional fees for non-recurring trades
Tokens Offered For Recurring Buys
- 196 total
Auto-Buy Fees on Uphold
|Fees for recurring buys||Debit/Credit: 2.49% to 3.99%||Spread fee: typically 0.8% to 1.2%|
With funding fees of up to 3.99%, it’s cheaper to fund deposits directly from your bank rather than use credit or debit cards. Uphold does not charge a trading fee, but instead uses a spread fee, which varies by crypto type. In the background, you’ll pay about 1% more for the asset you’re purchasing.
Read our full Uphold review.
How to Set Up Auto-Buy on UpholdExpand to learn more
Step 1: Open your account
Visit Uphold to start your account. You’ll need to provide proof of identity to complete the account setup.
Step 2: Add funding source
To add a funding source before trading, click on the three dots icon on the left menu, and select linked accounts.
Step 3: Select your auto-buy
Choose a funding source for your trade, then choose an amount for the trade and a cryptocurrency you want to buy. This screen also lets you choose the frequency with which to repeat the trade.
Verify the details of your recurring buy. When you click confirm, you’ll execute the first purchase.
eToro offers two key components to dollar cost average crypto: recurring deposits and a selection of crypto assets. Recurring deposits are available with debit cards after you’ve made one successful deposit of $10 or more.
However, you’ll need to complete one part of the transaction manually; eToro does not automatically buy crypto for you. Instead, you should visit the eToro once you get notice of a successful recurring deposit to buy your preferred cryptocurrency.
Unlike most crypto exchanges, eToro lets you purchase equities and exchange-traded funds as well as popular cryptocurrencies, so you can manage a wider range of asset types on one platform.
- Mix crypto with equities
- User-friendly interface
- Use social investing to follow the moves of successful traders
- Recurring deposits only (not buys)
- 1% spread fee
- Limited cryptocurrencies
Tokens Offered For Recurring Buys
- 26 total
Auto-Buy Fees on eToro
|Funding||Trade fees||Other fees|
|Fees for recurring buys||Debit/Credit: 0%||Spread fee: 1%||Conversion fee (non USD deposits: varies Withdrawal fee: $5 (non-US accounts)|
If you’re using a debit card to fund your account, eToro is a great way to go because they don’t charge a fee. However, you’ll pay a 1% spread on crypto purchases, adding to your cost.
Read our full eToro review.
How to Set Up Auto-Buy on eToroExpand to learn more
Step 1: Open your account
Visit eToro to open your account and verify your identity.
Step 2: Fund your account
From your account overview screen, click on settings and then recurring deposits.
Add a funding source and select an amount.
Step 3: Choose your purchase
On eToro, you can set up recurring deposits, but the platform asks you to choose an investment each time rather than automatically buying for you. When you receive a notice that your recurring deposit was successful, visit eToro or use the mobile app to make your purchase.
With affordable trading fees and over 130 crypto assets available, Binance offers a solid value for investors who want to build a position. If you’re stacking Bitcoin, you’ll enjoy no trading fees – with fees for other trades coming lower than some other exchanges. However, funding via debit card will cost 3.75% of the purchase amount.
- 130+ crypto choices
- No trading fee for Bitcoin
- Easy interface
- High fees for credit card funding
- Fees not broken out in the purchase preview
Tokens Offered For Recurring Buys
- 130+ total
Auto-Buy Fees on Binance
|Fees for recurring buys||Debit/Credit: 3.75%||Taker fee: .1500% to 0.4500% (no fee for BTC)|
Trading fees for Bitcoin are the lowest in our roundup at 0% for USD-based purchases. Many common trading pairs, including ETH/USD, LINK/USD, and SOL/USD, qualify for Binance’s Tier I trading fees which are 0.1500% (taker fee). High-volume traders or those paying trading fees with BNB can earn a discount. Fees for crypto assets outside of Tier 0 (Bitcoin) and Tier I (most major coins and tokens) are 0.4500%.
Read our full Binance review.
How to Set Up Auto-Buy on BinanceExpand to learn more
Step 1: Open your Binance account
Visit Binance to open your account and complete identity verification.
Step 2: Set up your auto-buy
Click on “buy crypto” on the top menu. Choose the dollar amount and crypto asset you want to buy.
Click on USD balance in the setup widget to choose or add a funding source, including bank transfer or debit card.
Step 3: Confirm purchase details
Check your work and confirm the recurring purchase.
Why is Dollar Cost Averaging a Good Strategy For Crypto?Expand to learn more
It’s easy to sing the praises of DCA, but is the strategy really better for crypto? In more than one study, including Vanguard’s oft-cited study and another from the CFA Institute, immediate lump sum investments outperformed DCA strategies over time.
In other words, if you invested $1,200 all at once, the investment typically outperforms 12 monthly purchases for $100 each. In fairness, DCA studies often focus on stocks. We found a very different pattern when looking at Bitcoin DCA performance, detailed in a later section.
Generally speaking, however, an immediate investment can outperform because it gains in value while a DCA investment is waiting for the next scheduled buy.
Lump sum investing beats DCA in many cases, but that headline misses the big picture. It also ignores cases where DCA saves investors from losing money in more volatile markets.
In other words, DCA may provide a better hedge against downside risk rather than outperform in gains.
If you invest your $1200 all at once and the market immediately drops, you’re stuck with your entry price. On the other hand, DCA allows you to deploy capital gradually, providing a lower average cost if prices trend downward.
Think of DCA as a risk reduction strategy that insures against an imperfect timed entry. In a volatile market like crypto investing, many investors might welcome the added safety. Dollar cost averaging also removes the guesswork of market timing, a trading technique that’s notoriously difficult to get right.
Some of the largest advantages of DCA revolve around volatility and bear markets, but dollar cost averaging also adds discipline to your investment strategy, ensuring that you’re always building toward your goal.
Benefits of DCA’ing Crypto
- Ensure consistent investing. Using a DCA buying strategy ensures you are always investing.
- Smooth price peaks and valleys. Lump sum investments lock in a price, like strapping yourself in for a rollercoaster ride. DCA, however, smooths out the ups and downs by reading buying power when prices are loftier.
- Remove emotion from the investment equation. When prices are volatile, investors can make hasty decisions, possibly buying or selling at inopportune times. DCA removes the fear of missing out (FOMO) and the fear of losing money from the equation.
- Protect against downward price trends. Lump sum buys offer no protection against drops in price immediately following your buy. DCA simply buys more at a lower price, bringing down your average cost.
Dollar cost averaging offers advantages, but in markets where prices are rising, the end result of DCA is a higher average cost compared to an immediate investment. Fortunately, if you continue to DCA, your average cost trendline will flatten over time.
Dollar Cost Averaging Crypto Calculator
When you set up a recurring buy-to-dollar cost average for your investment, you aren’t just smoothing out your cost chart. The strategy also keeps you moving toward a goal without interruption. Even small buys, done with consistency, can grow your portfolio significantly.
We can use Bitcoin historical prices to see how different investment amounts add up over time.
Let’s say you decided to invest in Bitcoin on 1/1/2018, when the price of one Bitcoin was $13,444.88. Looking at your budget, you feel comfortable investing $2,000 annually.
The table below indicates values through the last investment made in each year.
|Daily $5.48||Weekly $38.46||Biweekly $76.92||Monthly $166.67|
|1 year value||$1,121||$1,139||$1,163||$1,087|
|2 year value||$4,396||$4,475||$4,502||$4,559|
|3 year value||$23,863||$22,571||$22,537||$15,352|
|4 year value||$40,691||$45,034||$44,917||$50,510|
To compare, if you had purchased $8,000 in Bitcoin as a lump sum purchase on 1/1/2018, the value 4 years later (1/1/2022) would have been $27,645.
The other interesting pattern to notice is that during downturns, more frequent purchases protected gains better due to a lower average cost. However, monthly purchases outperformed more frequent purchases when Bitcoin moved up rapidly.
Dollar Cost Averaging Crypto Example
One of the biggest advantages of dollar cost averaging is protecting against market volatility, and in the crypto space that cautious approach can translate into larger gains in some cases.
Let’s work with some historical values for Bitcoin.
Five years prior to this writing, Bitcoin closed at $7,363.80. If you had purchased one Bitcoin on that date, it’d be worth $20,752.90 today.
However, dollar cost averaging over the same five-year period would have outperformed the lump sum investment of $7,363.80.
Here are the numbers.
If you took the $7363.80 investment and broke it down monthly ($123 monthly), your investment would be worth $28,361 based on today’s BTC price.
$7363.80 / 60 months = 122.73 (~$123)
Breaking the amount down to bite-sized weekly recurring buys, you would have seen an even larger gain. By investing $28 weekly, your investment would be worth $28,271 after five years.
$7363.80 / 5 years = $1,472.76 | $1,472.76 / 52 weeks = $28.32 (~$28)
Performance varies based on the time frame you compare, however. One main takeaway is that dollar cost averaging is most beneficial when prices are falling or the asset you’re buying sees frequent volatility.
DCA Crypto Strategy
We each have our own investment goals. Consider your priorities and budget before investing.
- Choose your assets carefully. There are over 20,000 cryptocurrencies, most of which face a challenging future. DCA won’t help if the asset goes to zero. Also, research trading volume. If you need to exit a position, you’ll need buyers.
- Consider your risk tolerance. More frequent purchases limit volatility’s effect on your portfolio, reducing risk, but can also slow performance when trends are bullish.
- Consider your budget. Cryptocurrencies are risky business. Don’t invest more than you can afford to lose. But also weigh crypto against other assets you hold. Choose an appropriate allocation.
- Think about your exit strategy. It’s always best to know your exit plan beforehand. Your asset allocation strategy plays a big role in knowing when you’ve bought enough and when it might be time to reallocate.
It can be safer to start small as well, building slowly until you can study the effects of trading costs and develop a stronger sense of long-term opportunity.
To Sum it Up
Dollar cost averaging offers several benefits, bringing discipline to your investments and smoothing market volatility. But one of the biggest advantages is seen during market instability. A DCA strategy allows you to capitalize on market swoons by purchasing more of your chosen cryptocurrency when prices are lower.
Now, investors can select an exchange that matches their investment goals by offering the right combination of assets, purchase intervals, and fee structure.
Frequently Asked Questions
Is Dollar Cost Averaging Good For Crypto?Expand to learn more
Dollar cost averaging can benefit any type of investment by ensuring you’re adding to your position consistently and buying more when prices are lower.
What Does Dollar Cost Averaging Mean in Crypto?Expand to learn more
Dollar cost averaging in crypto refers to buying crypto assets on a fixed schedule with a fixed amount of capital. If prices dip, your fixed allocation buys more, prioritizing low-cost purchases.
What Crypto is Best to DCA?Expand to learn more
Which crypto you choose depends on your investment goals. Bitcoin remains the most popular, and some exchanges, such as Binance, allow you to DCA Bitcoin without trading fees.
When Should You Stop Dollar Cost Averaging?Expand to learn more
You can stop dollar cost averaging when you’ve reached your target asset allocation. For example, if you want to make Bitcoin 10% of your portfolio, you can stop buying when you reach that target.
Is There a Dollar Cost Averaging Crypto App?Expand to learn more
Binance, Gemini, and Uphold all allow you to set up recurring buys to dollar cost average using an app on your mobile device.
What’s The Best Day to DCA Crypto?Expand to learn more
Price patterns can vary for a variety of reasons, including unpredictable news events. You can track prices for your favorite crypto to see if there is a pattern at all, although many investors just choose to time their investments to match cash flow, such as buying on payday.
How Often Should I DCA?Expand to learn more
Choose a frequency that fits your budget. More frequent purchases smooth out price moves more effectively.