Overview
This project analyzes the performance of two popular Bitcoin investment strategies: Dollar Cost Averaging (DCA) and Buy-the-Dip. The goal was to determine which approach yields better risk-adjusted returns over various market cycles.
Problem Statement
Retail investors often debate between:
- •DCA: Investing a fixed amount at regular intervals regardless of price
- •Buy-the-Dip: Waiting for price drops before investing
This analysis provides data-driven insights to inform investment decisions.
Data
- •Source: Historical Bitcoin price data (2012–2025)
- •Size: Daily closing prices spanning 13+ years
- •Analysis Windows: 3,950 rolling 3-year periods
Approach
Methodology
- •Collected daily Bitcoin price data
- •Implemented both investment strategies programmatically
- •Calculated returns across 3,950 rolling 3-year windows
- •Computed risk-adjusted metrics (Sharpe ratio, Win rate)
- •Statistical comparison of strategy performance
Key Metrics
- •Total return
- •Volatility
- •Sharpe ratio
- •Win rate
Results & Impact
| Metric | DCA | Buy-the-Dip |
|---|---|---|
| Avg Return | 312.46% | 268.57% |
| Sharpe Ratio | 0.541 | 0.467 |
| Win Rate | 63.02% | 36.98% |
Key Finding: DCA is more consistent (wins 63.0% of the time), with better risk-adjusted returns.
Key Learnings
- •Market timing is difficult; consistent investing often wins
- •Rolling window analysis provides robust conclusions across market cycles
- •Visualizing thousands of scenarios helps communicate complex findings