Changpeng Zhao (창펑 자오), founder of Binance, again stressed to cryptocurrency investors the importance of dollar-cost averaging (DCA), a strategy of regular staggered buying.

On July 26 local time, blockchain outlet U.Today reported that Zhao said understanding DCA is essential for investors seeking to build assets over the long term.

Zhao wrote to his followers, "If you don't know DCA, you'd better search it. You can't get rich without knowing some basic financial terms." The remark came after a discussion continued over when long-term investors should enter the market in bull and bear phases.

DCA is a method of investing a fixed amount at regular intervals regardless of price. Because it puts the same amount in on a weekly, monthly or yearly schedule, it buys more units when prices are low and fewer units when prices are high. A typical example is investing $500 a month in bitcoin. If the bitcoin price falls from $100,000 to $50,000, the same $500 can buy twice as much bitcoin.

He has supported DCA for years. In 2023, he also mentioned, "If you want to buy low and sell high, you have to be able to buy even when the market is depressed." He also responded to claims by figures who have stressed bitcoin accumulation strategies by saying, "DCA works" and "DCA wins."

One reason DCA is drawing attention in the cryptocurrency market is that it reduces investor psychology. In bull markets, excessive optimism is likely to grow, and in sharp downturns, excessive fear is likely to grow. This repeated cycle of emotion can easily lead to a pattern of buying after prices rise sharply and selling after they plunge. Buying mechanically at set times helps reduce such mistakes.

Still, DCA is not a cure-all. It can reduce the risk of entering all at once at the wrong time, but it does not completely eliminate the possibility of losses. Especially when a strong rally continues, returns can be lower than investing all at once early on. If the investment target itself is chosen poorly, staggered buying alone cannot avoid risk.

Psychological discipline is also a variable. DCA looks simple in concept, but it is not easy to keep the same rules over several years. Even so, because there have historically been cases of strong performance when applied over long periods to major cryptocurrencies such as bitcoin, interest is expected to continue among investors who put more weight on sustained buying strategies than on market timing.

DCA (If you don't know the term, better google it. You can't get rich without knowing some basic financial terms.) https://t.co/PjRC20bdbp