There's lots of talk in both traditional and crypto markets about dollar cost averaging (DCA) into your positions. It can be especially helpful in markets like crypto where there's lots of volatility and uncertainty.
As much as we'd like to sell it all at THE top, it's easier said than done. The more likely scenario is you keep believing the next pump is right around the corner riding "the crash" all the way through crypto winter without ever taking action.
This is where DCA'ing in reverse comes in. It's never talked about, but DCAing works the same way when selling. Here's my process:
The first thing I did was fire up a spreadsheet and manually crunch 20+ different reverse DCA scenarios:
As per usual, my first attempt resulted in my favorite scenario which was to evenly distribute the quantity across 5 chunks at big round numbers.
Price was just breaking above $20k at the time, and my price target was (and still is) $250k, so selling 10 bitcoin (for example) looked like this:
I could have stopped here, but there was this nagging feeling that something was missing. After sharing with some friends, it turned out we were all trying to figure this out and what was missing was probabilities.
For example, how much do I sell at each chunk based my belief that we had an 80% chance of hitting $50k and a 20% chance of hitting $250k? We couldn't find the answer anywhere, so I hired a mathematician :)
BitLift's new resident mathematician along with other community members came up with a few more ideas like gradually decreasing probability from 100% at current price to 20% at the target price and using a Fibonacci sequence to calculate the prices and probabilities.
I packaged this all up in a Google Spreadsheet Tool so you can tinker with it yourself. I hope it helps! Hit reply and LMK what you think.
To the moon 🚀 — @GΞR฿Z Founder & Creator @ BitLift
$1T Couldn't Hodl On
Back on Feb. 19th Bitcoin reached a $1 Trillion market cap (~$53,500) and we've been struggling to hodl it ever since. This week, we broke down.
I think this rally just progressed to fast to soon and now we're paying the price for it. We'll slowly climb back and build an even stronger support in this ~$50k range which I still think will become the bottom of the next crypto winter.
I ran some analysis to see how this compares to the $100B market cap line we crossed back in the 2017 bull market which you can see in the chart below.