In a bull market, everything is good. With Bitcoin climbing to new highs every month, no matter which indicator, analysis, data-point you look at, everything will tell you to buy or hold. But, what if the markets weren’t so bullish?
At the time of writing, Bitcoin[1] was trading at a level a little over $16,000, 120 percent higher than at the start of the year, 320 percent higher than its lowest point in 2020, 80 percent higher than its value six months ago, and 40 percent higher than its value three months ago. By all means, the market is in the green. In such a year, no matter what kind of investing strategy you entertain, you’d ensure a profit, so long as you hold on for a good few weeks.
In such a bullish market in 2020, a simple dollar-cost-averaging (DCA) strategy would fetch you a return of over 50 percent through simple daily Bitcoin buys. But, does such a strategy work every year? Does it work in a sideways year? And more importantly, does it work in a bearish year? To test this let’s see how the DCA strategy performed in 2018, a year when the market fell by 72 percent after reaching its ATH in December of the previous year.
To compare this 2018-DCA with a baseline, let’s look at the top-10 worst-performing days of 2018, in order to see if holding on to a depreciating Bitcoin in 2018 is better than buying and selling during the 10 worst-performing days of the year.
Cursed calendar
Just like we looked at the top-10 best-performing[3] days of 2020, we look at the opposite for bearish 2018. Despite 2018 having a lot of bad days, the worst-10 days of the
