Avoiding Bitcoin Losses: Dollar-Cost Averaging and Long-Term Holding

Investors who bought Bitcoin through exchange-traded funds (ETFs) have underperformed, losing money despite the coin's price increase over time. A study by Morningstar found that from January 2024 to June 2026, investors in spot Bitcoin ETFs lost 5.8% annually while the funds returned 8.5% a year on aggregate.

The author of this article recommends investing in Bitcoin using dollar-cost averaging, making regular purchases over time. With $1,000, they would make five separate scheduled purchases of $200 at intervals of one or two weeks, allocating the capital within two months.

This approach helps cope with volatility and is psychologically useful as it prevents investors from thinking of Bitcoin as a lottery ticket that could explode in value overnight. However, research by Vanguard shows that lump-sum purchases were superior to spread-out purchases 73.7% of the time.

The author also advises against trying to time the market and recommends holding onto Bitcoin for an extended period, at least one full market cycle of about four years. The coin's protocol causes its market cycles due to a recurring event called the halving, where the reward paid to miners is cut in half every four years.