As Ethereum (ETH) begins to reverse its gains, initiated by the cryptocurrency market recovery earlier this week, data suggests that dollar-cost averaging (DCA) by investing $100 per week in 2023 would not have been a profitable strategy for the second-largest cryptocurrency so far.
Specifically, DCA is a method that includes spreading out investments by buying at intervals and in roughly equal cash amounts, regardless of the price. It is popular among newcomers as it tries to minimize the impact of volatility and psychology on the overall investment, as opposed to timing the market.
However, despite these advantages, DCA has its shortcomings, as it relies on the notion that prices will, ultimately, always rise, but when this is not the case, such a strategy cannot protect the investor from declining market prices, as is evident in the case of Ethereum.
Indeed, using this method on Ethereum in 2023, i.e., purchasing $100 worth of ETH each week since January 1, 2023, the $3,800 investment (38 weeks) would today be worth $3,618.97, or 4.76% less than the amount invested, according to the most recent data retrieved from cryptoDCA on September 20.
Earlier, crypto analyst Benjamin Cowen shared his own calculations, albeit for the period leading up to August 3, 2023 (31 weeks), which hailed similar results as above, indicating that the investor using the weekly $100 DCA strategy on Ethereum would be at a loss by 4.67%, as he shared in an X post on September 19.
On the other hand, using the same method on Bitcoin (BTC), i.e., spending $3,800 over the course of 38 weeks on it, would have brought the participating investor into profit, providing a 5.69% return on investment as of September 19, with a DCA value of $4,016.30, as Finbold reported earlier.
Ethereum price analysis
Meanwhile, Ethereum was at the time of publication changing hands at the price of $1,627.05, recording a decline of 1.17% in the last 24 hours, a 1.7% gain across the past seven days, and a 2.62% drop during the previous month, as the latest charts suggest.
On top of that, earlier data has demonstrated that Ethereum had lost $13 billion in net capital last week, according to the breakdown of the market realized value net capital change for the asset shared by crypto trading expert Ali Martinez on September 15, as Finbold reported at the time.
That said, global blockchain leader at Ernst & Young (EY), Paul Brody, has recently said that “Ethereum is going to eat the entire blockchain sector and everything that is not Ethereum will eventually become an Ethereum Layer 2,” while its surge of specialization among key players could assist in possible price growth in the nearer future.
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