Dollar-Cost Averaging in Bull and Bear Markets: What Works and Why

When the price of Bitcoin drops 30% in a week, it’s easy to panic. You check your portfolio, see red numbers, and wonder if you should sell everything and wait for the dust to settle. But what if the smartest move isn’t selling at all? What if the best thing you can do is keep buying-exactly the same amount, every week, no matter what?

That’s dollar-cost averaging, or DCA. It’s not a magic trick. It’s not a get-rich-quick scheme. It’s a simple, repeatable habit: invest a fixed amount at regular intervals, no matter if the market is up, down, or sideways. And over time, it works-especially in crypto, where volatility isn’t a bug, it’s the feature.

How DCA Works in a Bull Market

In a bull market, prices rise. Bitcoin goes from $30,000 to $70,000. Ethereum climbs from $1,800 to $4,000. It feels like everyone’s making money. But here’s the catch: if you wait to invest a lump sum until you’re sure the bull market has started, you’ll miss the early gains.

Let’s say you have $3,000 to invest. If you put it all in when Bitcoin hits $60,000, you get 0.05 BTC. But if you’d started DCA six months earlier at $30,000, putting in $500 a month, you’d have bought 0.1 BTC by the time it hit $60,000. That’s double the amount. And if you kept going, you’d own even more as prices climbed.

DCA doesn’t maximize returns in a bull market-it smooths them out. You buy fewer coins as prices rise, but you also avoid the risk of buying at the very top. And because bull markets last longer-on average, 51 months-you’re more likely to ride the wave than get crushed by a sudden dip.

Historical data from Russell Investments shows that over the past 92 years, bull markets delivered an average return of 175%, while bear markets saw an average drop of 31%. The math is clear: staying invested through the ups gives you far more upside than trying to time the start.

How DCA Works in a Bear Market

Bear markets are where DCA shines. When prices fall, your fixed investment buys more. If Bitcoin drops from $60,000 to $30,000, your $500 buys twice as much as it did before. When it falls to $20,000, you’re buying three times as much. Each payment becomes a discount coupon for the next phase of growth.

Charles Schwab’s analysis of seven major bear markets since 1970 found that the biggest gains often happen right after the bottom. The 2020 crash lasted just 33 days-the shortest on record. If you paused your DCA during that drop, you missed the 100% rebound that followed in the next six months.

Think about the 2008-2009 financial crisis. Bitcoin didn’t exist yet, but stocks followed the same pattern. Investors who kept buying during the crash ended up with far lower average costs. When the market recovered, they weren’t just breaking even-they were ahead. The same logic applies to crypto. The 2018 bear market saw Bitcoin drop from $20,000 to $3,200. Those who DCA’d through it bought over 6x more coins than those who waited for the bottom.

And here’s the key insight: DCA doesn’t predict the bottom. It lets the market reveal it. You don’t need to know when the crash will end. You just need to keep showing up.

DCA vs. Lump-Sum Investing

Some people argue that lump-sum investing beats DCA. After all, if you invest $6,000 all at once at the start of a bull run, you’ll make more than if you spread it out. And they’re right-if you pick the perfect moment.

But here’s the problem: no one can consistently pick the perfect moment. Charles Schwab found that in 67% of cases over the past 50 years, lump-sum investing outperformed DCA-if you invested on the exact day the market turned up. But since no one can predict that day, the odds of hitting it are worse than flipping a coin.

Meanwhile, DCA eliminates timing risk. You don’t need to guess. You just invest. And when markets dip, you’re actually rewarded for it. In bear markets, DCA builds a lower cost basis. In bull markets, it keeps you in the game. You’re not trying to win the lottery-you’re building a position.

And the data backs this up. A portfolio fully invested at the bottom of a bear market returned 47% in 12 months, 75% in 24 months, and 83% in 36 months. But if you waited just one month after the bottom to invest, your return dropped to 26%. Six months? Only 14%. The cost of waiting isn’t just missed gains-it’s a massive hit to your long-term wealth.

Why Emotion Is Your Biggest Enemy

Most people don’t fail because they don’t understand markets. They fail because they can’t control their emotions.

When prices crash, fear screams: “Sell now!” When prices surge, FOMO whispers: “Buy now before it’s too late!” Both reactions lead to buying high and selling low-the exact opposite of what you want.

Fidelity’s behavioral research shows that emotional decisions are the number one reason investors underperform. Selling during a bear market and staying out? That’s how you lock in losses. Buying at the peak of a bull run? That’s how you get stuck holding when the tide turns.

DCA removes the decision. You set it and forget it. Your $500 goes in every Monday. No thought. No panic. No excitement. Just consistency. That’s the power of automation. It doesn’t make you rich overnight. It keeps you from blowing up your portfolio.

RBFCU’s research found that fear of recession is one of the biggest triggers for investors to abandon their strategy. But history shows recessions end. Markets recover. The only thing that guarantees you won’t recover? Getting out.

How to Set Up DCA for Crypto

Setting up DCA is simple. Here’s how:

1. Choose a crypto you believe in long-term-Bitcoin, Ethereum, or another major asset.
2. Decide how much you can afford to invest weekly or monthly. Don’t go overboard. Start with $50, $100, or $200.
3. Use a platform that supports recurring buys. Coinbase, Kraken, Binance, and Plynk all offer automated DCA.
4. Set the schedule. Weekly is fine. Monthly works too. Just be consistent.
5. Turn on notifications so you know when it happens-but don’t check your portfolio every hour.

Pro tip: Don’t change your amount based on price. If Bitcoin crashes, don’t suddenly increase your buy. If it surges, don’t cut back. Stick to the plan. That’s the whole point.

And if you’re nervous? Start small. $25 a week. After six months, you’ll have $650 invested. If Bitcoin doubled in that time, you’d be up 100% on your cost basis. If it halved? You’d still have half the coins you’d have bought at the top-and you’d be ready to buy more when it recovers.

Who Should Use DCA? Who Shouldn’t?

DCA isn’t for everyone. But it’s perfect for most people who are investing in crypto.

Perfect for:

• Long-term investors (5+ years)
• People with steady income
• Those who don’t want to watch charts all day
• Beginners who don’t trust their timing

Not ideal for:

• People needing cash in the next 1-2 years (crypto is too volatile for short-term goals)
• Those who can’t handle seeing paper losses
• Traders trying to scalp daily moves

Scotiabank’s analysis found that retirees or people saving for a house in two years should avoid crypto entirely. But if you’re 25 and investing for retirement? DCA is one of the safest tools you have.

What About New Bear Markets?

The last bear market was in 2022. Bitcoin fell from $69,000 to $15,500. Ethereum dropped from $4,800 to $1,000. It felt endless. But by late 2023, both had recovered over 200%.

Those who DCA’d through it didn’t just survive-they thrived. They bought Bitcoin at $18,000, $14,000, $12,000. When it hit $60,000 again, their average cost was half of what new buyers paid.

And the next bear market? It’s coming. Markets always cycle. The question isn’t whether it’ll happen-it’s whether you’ll be ready.

Right now, in November 2025, Bitcoin is trading near $72,000. Bull market? Maybe. But history says it won’t last forever. The smart move isn’t to try to predict the end. It’s to keep buying, no matter what.