Not much has really changed in Bitcoin over the past week. The market continues to chop sideways, and I still view the $110,000 level as a reasonable area to expect a short-term bounce. So here, I want to shift slightly from the usual short-term Bitcoin price outlook and instead explore a strategy that can help long-term investors optimize their entries into the market. Can we do better than simply dollar-cost averaging (DCA) into Bitcoin at regular intervals? Well yes. But can we do it not just in BTC, but across all markets?
Strategic DCA
Standard DCA is simple: invest the same amount at fixed intervals, regardless of market conditions. Strategic DCA adds a filter to avoid buying during the most overvalued periods and wait until conditions normalize before resuming accumulation. One effective filter is based on the Short-Term Holder Realized Price, the average cost basis for new Bitcoin holders (coins held for fewer than 155 days). From this, we can construct a Short-Term Holder MVRV (Market Value to Realized Value), which compares market price to average accumulation price. This is a strategy we’ve been discussing for some time, as outlined in this video, but here I really wanted to put this theory to the test.
Historically, when this ratio is above its all-time average of 1.124 as outlined by a distribution curve, Bitcoin is relatively overvalued, or at the very least not at a discount! By avoiding DCA purchases during these periods, investors would have outperformed standard DCA by 30.9% of their invested capital amount since 2015. In other words, simply waiting to buy until the market cooled off led to meaningfully better outcomes and higher returns on the same invested capital.
Refining The Approach
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