Scenario:
- Investment Amount: $300 per month
- Investment Period: 15 months (March’23 to May’24)
- Total Investment: $4,500
Monthly Bitcoin Prices and Calculations:
| Month | Price of ckBTC($) | ckBTC Purchased (ckBTC) | Total ckBTCin Wallet | BTC$ Worth in Wallet | Monthly Profit |
|---|---|---|---|---|---|
| March | 28,473.33 | 0.010536 | 0.010536 | 299.995 | -0.005 |
| April | 29,227.10 | 0.010264 | 0.020800 | 607.937 | 7.937 |
| May | 27,218.41 | 0.011022 | 0.031822 | 866.155 | -33.845 |
| June | 30,471.85 | 0.009845 | 0.041668 | 1269.687 | 69.687 |
| July | 29,230.87 | 0.010263 | 0.051931 | 1517.979 | 17.979 |
| August | 25,934.02 | 0.011568 | 0.063498 | 1646.771 | -153.229 |
| September | 26,967.40 | 0.011125 | 0.074623 | 2012.389 | -87.611 |
| October | 34,657.27 | 0.008656 | 0.083279 | 2886.231 | 486.231 |
| November | 37,718.01 | 0.007954 | 0.091233 | 3441.127 | 741.127 |
| December | 42,280.23 | 0.007096 | 0.098329 | 4157.352 | 1157.352 |
| January | 42,569.76 | 0.007047 | 0.105376 | 4485.821 | 1185.821 |
| February | 61,168.06 | 0.004905 | 0.110280 | 6745.631 | 3145.631 |
| March | 71,333.48 | 0.004206 | 0.114486 | 8166.676 | 4266.676 |
| April | 60,609.50 | 0.004950 | 0.119436 | 7238.932 | 3038.932 |
| May | 68,536.88 | 0.004377 | 0.123813 | 8485.743 | 3985.743 |
Total ckBTC Purchased:
- Total ckBTC in Wallet by May: 0.123813 BTC
Average Cost per Bitcoin:
- Total Investment: $4,500
- Total Bitcoin: 0.123813 BTC
Average Cost per Bitcoin = $4,500 / 0.123813 = $36,339.91
Value After 15 Months:
- Value of Bitcoin in Wallet (at May’s price): 0.123813 BTC * $68,536.88 = $8,485.74
Benefits of Using DCA:
- Lower Average Cost: The average cost per Bitcoin is $36,339.91, which is significantly lower than the peak prices during the investment period.
- Mitigated Risk: By spreading the investment over 15 months, the investor reduces the risk of investing a large amount just before a market downturn.
- Profit in Recovery: As the market recovers, the value of the accumulated Bitcoin increases. In this case, the portfolio value is $8,485.74 after a total investment of $4,500, resulting in a profit of $3,985.74.
- Reduced Emotional Impact: DCA helps the investor avoid emotional decisions and market timing, which can often lead to poor investment choices.
- Consistent Investment: Encourages disciplined and consistent investing habits, making it easier for investors to stay committed to their long-term goals.
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