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Dollar Cost Averaging (DCA) Meaning

Dollar cost averaging (DCA) is an investment strategy where a fixed amount of capital is invested at regular intervals regardless of asset price. This approach reduces the impact of short-term volatility by spreading purchases over time instead of attempting to time the market.

In volatile markets such as cryptocurrencies, DCA is often used to mitigate emotional decision-making and reduce exposure to price swings. By averaging entry prices, investors may lower the risk of making large purchases at unfavorable levels.

DCA is commonly applied in long-term accumulation strategies rather than active trading. While it does not guarantee profits or protect against prolonged downturns, it provides a disciplined framework for gradual exposure to an asset.

The strategy is valued for its simplicity and consistency, making it accessible to both retail and institutional participants seeking systematic market participation without relying on short-term forecasts.

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