Dollar-cost averaging is an investment approach that divides purchases into a series of fixed monetary contributions made at regular intervals. The amount stays constant while the quantity bought changes with the market price. The method can be used with currencies other than the US dollar and with many types of assets, including cryptocurrencies.
The schedule is part of the method
A plan might allocate the same sum every month, whether the market has risen or fallen. Lower prices buy more units; higher prices buy fewer. Buying an equal number of tokens each month is different because the money committed then varies.
Dollar-cost averaging also differs from deciding to buy extra only after a loss. That is averaging down, whereas a regular DCA plan does not require a price decline to trigger its next purchase.
Timing risk and tradeoffs
Spreading purchases reduces dependence on a single entry price and can make investing more systematic. It cannot repair weak asset fundamentals or guarantee recovery. A rising market may favor an earlier lump-sum purchase, and frequent fees can erode small contributions. Results therefore depend on the asset’s price path, the schedule, and the actual costs.