ForkLog is not responsible for readers\u2019 investment decisions or the outcomes that may result from using the investment recommendations presented in this article.<\/p>\n<\/div>\n
Saylor\u2019s method<\/strong><\/h2>\nOne of the leading evangelists of applying the HODL<\/span> concept among institutions was MicroStrategy\u2019s chief, Michael Saylor. By raising debt, diluting its equity and using derivatives, the company has accumulated more than 252,000 BTC since 2020.<\/p>\n![\"Buying](\"https:\/\/lh7-qw.googleusercontent.com\/docsz\/AD_4nXd4wQIWZHu8udwFqdvzHOk_oS6aYivMIOUjTKVYn_MOFs_ZbxK472zZy5DM1egKUFnxugvS7qikGvZZp_ehrgigEjMiz_a6Rc-qsnMvEaWhHilibn89QurgBI0Bj6w8x2gPb3fHkT0ZJ_AQ3-G6vi1aozAx?key=0bH4KYF0WMAJLfmNbLjEneUo\")
Source: BitcoinTreasuries<\/a>.<\/figcaption><\/figure>\nJapan\u2019s Metaplanet offers a recent example: in less than a year in 2024 it added 850 BTC to its assets. To achieve this it used borrowed funds as a hedging instrument for its digital-gold position in the options market.<\/p>\n
The firepower of large public firms is hardly available to ordinary users who want to accumulate the first cryptocurrency. They may, however, find modified DCA<\/span> strategies\u2014dollar-cost averaging\u2014useful.<\/p>\nDCA entails buying or selling an asset gradually in small, equal tranches rather than deploying the full amount at once. This reduces trading and psychological risks, enabling a clear, workable plan.<\/p>\n
Most investors pick simple entry intervals\u2014daily, weekly or monthly. That helps budget funds and build a realistic long-term accumulation plan.<\/p>\n
Taking bitcoin\u2019s average annual return over the past 13 years yields roughly 99%. Over the past ten years the average return was 66%, and over five years 51%.<\/p>\n
These are not the \u201cx\u201d multiples some influencers tout, but what other asset delivers an average of 50% a year? Moreover, bitcoin simply sits in a cold wallet with no obligations to anyone. That is what Saylor means when he talks about the returns of digital gold:<\/p>\n
\n\u201cI consider it far more rational to borrow $1bn in the fixed-income market and put it into bitcoin at 50% per annum with no counterparty risk than to look for someone willing to pay me 12\u201314%.\u201d<\/p>\n<\/blockquote>\n
As a more down-to-earth example, consider the optimal way to buy a set amount of bitcoin once a month\u2014say, after payday.<\/p>\n
Although DCA is simple and quickly becomes a habit, many try to refine rough edges that could lift returns without increasing risk over long stretches.<\/p>\n
Buying the fear<\/h2>\n
The idea of optimising DCA via market sentiment<\/span> rests on the premise that buying assets during panic and fear is the most \u201cadvantageous\u201d investor behaviour. You probably know this as Warren Buffett\u2019s oft-advertised formula: \u201cBuy when everyone is fearful, and sell when everyone is greedy.\u201d<\/p>\nCrypto has a simple gauge for this\u2014the fear and greed index. On that basis one may assume that readings from 0 to 26 are optimal moments for investing.<\/p>\n
This hypothesis can be tested statistically over one-, three-, five- and six-year horizons by comparing standard once-a-month DCA with DCA during \u201cExtreme Fear\u201d.<\/p>\n
The cardinal rule is to invest the same amount every time; otherwise averaging behaves differently, altering the logic of the calculations.<\/p>\n
Classic DCA shows returns of roughly 366% over the past six years (the period is chosen because the fear and greed index has been around only since 2018) and 220% over the past five. Over three years the figure is about 104%, while a year of monthly bitcoin purchases yields 26%.<\/p>\n
It is easy for early bitcoiners to preach HODL when any $1,000 move today means only ~1.5% of a new user\u2019s deposit. For \u201cold hands\u201d, the same price change can mean 2x or more.<\/p>\n
It must be acknowledged: early HODLers are on the far side of a chasm from the average user who is just starting to accumulate bitcoin. Unrealistic promises of easy wealth only push newcomers away, disappointing them before they begin.<\/p>\n![\"Buying](\"https:\/\/lh7-qw.googleusercontent.com\/docsz\/AD_4nXcm3l9yG7FtDhcjLChFmEVf1Eya8mWtrGOV6nhUiA8MWMO9BTTSUiQjwNCDIe59H8anZK4DYJ4IzeRlSQoQuumWtoMYDMKGneR0LIMyrbE2V-zcSmFCwFqSpHJtm1tDb1yYHMbHPYo3SGEHZ7MPjZyJywtW?key=0bH4KYF0WMAJLfmNbLjEneUo\")
Correlation of the fear and greed index with the bitcoin price. Source: Bitstat<\/a>. <\/figcaption><\/figure>\nTo reduce noisy fluctuations in the index, let\u2019s set a rule: buy bitcoin on the second day after the gauge drops below 26 (\u201cExtreme Fear\u201d). That way the market is clearly in panic, rather than an accidental dip into the critical zone.<\/p>\n
The snag is that during bull phases chances to invest are scarce: prices spend most of the time in the \u201cgreen zone\u201d and fear is rare.<\/p>\n
Results<\/strong><\/h2>\n
Japan\u2019s Metaplanet offers a recent example: in less than a year in 2024 it added 850 BTC to its assets. To achieve this it used borrowed funds as a hedging instrument for its digital-gold position in the options market.<\/p>\n
The firepower of large public firms is hardly available to ordinary users who want to accumulate the first cryptocurrency. They may, however, find modified DCA<\/span> strategies\u2014dollar-cost averaging\u2014useful.<\/p>\n DCA entails buying or selling an asset gradually in small, equal tranches rather than deploying the full amount at once. This reduces trading and psychological risks, enabling a clear, workable plan.<\/p>\n Most investors pick simple entry intervals\u2014daily, weekly or monthly. That helps budget funds and build a realistic long-term accumulation plan.<\/p>\n Taking bitcoin\u2019s average annual return over the past 13 years yields roughly 99%. Over the past ten years the average return was 66%, and over five years 51%.<\/p>\n These are not the \u201cx\u201d multiples some influencers tout, but what other asset delivers an average of 50% a year? Moreover, bitcoin simply sits in a cold wallet with no obligations to anyone. That is what Saylor means when he talks about the returns of digital gold:<\/p>\n \u201cI consider it far more rational to borrow $1bn in the fixed-income market and put it into bitcoin at 50% per annum with no counterparty risk than to look for someone willing to pay me 12\u201314%.\u201d<\/p>\n<\/blockquote>\n As a more down-to-earth example, consider the optimal way to buy a set amount of bitcoin once a month\u2014say, after payday.<\/p>\n Although DCA is simple and quickly becomes a habit, many try to refine rough edges that could lift returns without increasing risk over long stretches.<\/p>\n The idea of optimising DCA via market sentiment<\/span> rests on the premise that buying assets during panic and fear is the most \u201cadvantageous\u201d investor behaviour. You probably know this as Warren Buffett\u2019s oft-advertised formula: \u201cBuy when everyone is fearful, and sell when everyone is greedy.\u201d<\/p>\n Crypto has a simple gauge for this\u2014the fear and greed index. On that basis one may assume that readings from 0 to 26 are optimal moments for investing.<\/p>\n This hypothesis can be tested statistically over one-, three-, five- and six-year horizons by comparing standard once-a-month DCA with DCA during \u201cExtreme Fear\u201d.<\/p>\n The cardinal rule is to invest the same amount every time; otherwise averaging behaves differently, altering the logic of the calculations.<\/p>\n Classic DCA shows returns of roughly 366% over the past six years (the period is chosen because the fear and greed index has been around only since 2018) and 220% over the past five. Over three years the figure is about 104%, while a year of monthly bitcoin purchases yields 26%.<\/p>\n It is easy for early bitcoiners to preach HODL when any $1,000 move today means only ~1.5% of a new user\u2019s deposit. For \u201cold hands\u201d, the same price change can mean 2x or more.<\/p>\n It must be acknowledged: early HODLers are on the far side of a chasm from the average user who is just starting to accumulate bitcoin. Unrealistic promises of easy wealth only push newcomers away, disappointing them before they begin.<\/p>\n To reduce noisy fluctuations in the index, let\u2019s set a rule: buy bitcoin on the second day after the gauge drops below 26 (\u201cExtreme Fear\u201d). That way the market is clearly in panic, rather than an accidental dip into the critical zone.<\/p>\n The snag is that during bull phases chances to invest are scarce: prices spend most of the time in the \u201cgreen zone\u201d and fear is rare.<\/p>\n\n
Buying the fear<\/h2>\n
Results<\/strong><\/h2>\n