The astonishing increase of value of the Bitcoin vs. the US Dollar at the end of 2020 makes appear some discussions, reliefs and regrets about the past few years and the missed opportunities. Numerous threads on the social networks are about TO HODL or not TO HODL.
After describing the DCA investment strategy, we can propose another basic strategy of investment: the dollar-value averaging (DVA), i.e. invest an amount of dollars in bitcoins on a periodic basis, amount based on a predefined target in dollars regarless of market fluctuations.
2 versions exist of this method:
- the investment cannot be negative, it means that the investor does nothing when the value of the portfolio is over the predefined target.
- the investment can be either positive or negative, it means that the investor adds or withdraws from the portfolio in order to reach the predefined target.
The method
- Investment always positive (no withdraw)
invest an of dollars in bitcoin on a weekly basis
at the close (fictive) of the second working day, Tuesday (arbitrary choice)
start at the first week of the year
end at the last week of the year
ajusted amount for reaching an increment of 50 dollars by week
never withdraw
compare with the amount put in a bank account instead (0% interest)
- Investment with withdrawals (full adjustment)
invest an amount of dollars in bitcoin on a weekly basis
at the close (fictive) of the second working day, Tuesday (arbitrary choice)
start at the first week of the year
end at the last week of the year
ajusted amount for reaching strictly an increment of 50 dollars by week
compare with the amount put in a bank account instead (0% interest)
compare the number of bitcoins held over time for both versions
DVA
dva1 crypto: value of the investment in the asset (bitcoin) in US Dollars for the DVA method 1 (no withdraw)
dva2 crypto: value of the investment in the asset (bitcoin) in US Dollars + the value of the sales of bitcoins in US Dollars for the DVA method 2 (full adjustment)
dva2 crypto: value of the investment let in the asset (bitcoin) in US Dollars for the DVA method 2
dva1 expenses: US dollars spent for the investment in the cryptocurrency with the DVA method 1
dva2 expenses: US dollars spent for the investment in the cryptocurrency with the DVA method 2
savings: value of the cash at 0% of interest in US dollars
no withdraw (dva1): number of bitcoins held with the DVA method 1
full adjustment(dva2): number of bitcoins held with the DVA method 2