If assets rose linearly dollar cost averaging would be a bad tactic. You would be better of buying as much as possible when you could and then let those assets rise over time until the end where you would be on your luxury yacht smoking cigars and living happily ever after.

But most assets do not rise linearly they — shock — horror — actually fall as well. This would not be that much of a problem if only we knew when they would fall and where the bottom would be. But again — we do not.

If you buy 10 assets at value 100 you just spent 1000 — yes I know — impressive stuff — thanks for the clapping!

If these 10 assets rise linearly 10% over a year you end up with 1100 — yes still impressive I know. But as most assets go up and down in value you might as well have an asset that had fallen 10% in value and therefore lost money.

But as assets rarely rise linearly a 10% increase over a year may have included drops of 15–20% as well as rises of 15–20%. A graph of most interesting high-yield assets will look a lot like drawings from a 5 yo. Lots of curves and not many absolute straights.

If you dollar cost average you can actually “gain” from losses of value as you can then get more assets for a lower price. Yes the assets you already bought has also decreased in value, but as you buy in smaller amounts the loss will be mitigated. You may only have lost 10% of a single assets that initially was worth 100 but now they only cost 90 so you get 1.1 asset for your 100 value investment.

As Wikipedia continues in the definition:

Dollar cost averaging is not always the most profitable way to invest a large sum, but it is alleged to minimize downside risk.

And if there is something you really want to do when investing in cryptocurrencies it is minimizing downside risk. As stated earlier, if we had full control over the market and knew when the highs and lows would occur investing would be easy. But we do not.

Cryptocurrencies fluctuates like nothing else. It is irrational mob mentality on speed. You can be lucky as hell and gain 50–100% overnight but you might as well have lost it. So letting go of a bit of potential upside gain to cap downside risk is worth it.