Dollar cost averaging into Bitcoin: why now?

Following Bitcoin's sharp correction from its October 2025 all-time high of US$126,000, the cryptocurrency market has entered a phase that history suggests rewards patient, disciplined accumulation rather than reactive, emotion-driven trading. As sentiment swings between fear and optimism, liquidity conditions tighten, and on-chain indicators like the Market-Value-to-Realised Value (MVRV) ratio settle back into mid-cycle ranges, the current environment presents precisely the conditions where Dollar-Cost Averaging (“DCA”) tends to shine.

Time in the Market v. Timing the Market

DCA is a strategy designed to reduce timing risk while capturing long-term upside in structurally appreciating assets. It is a strategy where a fixed amount is invested over recurring periods of time. The intended effect of this is to lower the average price paid for the investment and ultimately maximise returns.

Bitcoin MVRV: What is it telling us?

MVRV is a ratio that compares an asset’s Market Capitalisation to its Realised Capitalisation.

● Market Cap reflects the current market value based on the latest trading price.

● Realised Cap values each unit of the asset at the price it last moved on-chain, offering a more “true-to-history” measure of invested capital.

By evaluating the relationship between these two metrics, MVRV helps indicate whether the asset’s current price is above or below its “fair value.”

● Higher MVRV → market participants, on average, hold significant unrealized profits (potentially overvalued conditions).

● Lower MVRV → participants are closer to breakeven or at unrealised losses (potentially undervalued conditions).

This makes MVRV a useful tool for assessing market profitability, investor sentiment, and potential overbought/oversold zones.

Key Thresholds

● MVRV < 1.0: Market trading below "cost basis" - historically deep bear market territory

● MVRV 1.0–2.0: Accumulation zone - historically strong buying opportunity

● MVRV 2.0–3.0: Mid-cycle range - healthy profit-taking, room for growth

● MVRV > 3.5: Overheated territory - historically signals cycle tops/euphoria

● MVRV > 4.0: Extreme overvaluation - major correction risk

It should be noted that on-chain metrics such as MVRV are not to be considered a trading indicator but rather a tool used to suggest certain market dynamics. A great resource for on chain data is (VIEW LINK).

The Valuation Story Supports Patience

The MVRV ratio for bitcoin currently hovers near 1.6 (as at 1 December 2025) - comfortably below the overheated territory above 3.5 that typically signals late-cycle euphoria. This metric tells us that while holders are profitable, the market likely remains in mid-cycle territory rather than approaching exhaustion. For DCA investors, this creates an ideal scenario: accumulating during periods that historically have delivered some of the highest returns over subsequent 12-to-24-month windows, without the elevated risk of buying at cycle peaks.

When Corrections Create Opportunity

Bitcoin's approximately 28% pullback since October has fundamentally altered the risk-reward landscape. Combined with the normalisation of market leverage that accompanied the correction, investors may start to view the market as having cooled off with a reduced risk of buying into bubble-like conditions. These are precisely the volatile, uncertain environments where DCA demonstrates its greatest strength, systematically smoothing entry points across both correction phases and subsequent recovery periods. Rather than attempting the nearly impossible task of timing a perfect bottom, DCA investors quietly accumulate through the turbulence, creating what market analysts often call "asymmetric opportunity zones"- periods where potential upside significantly outweighs downside risk.

Macro Headwinds Are Temporary; Positioning Is Permanent

The current macroeconomic backdrop presents challenges that make DCA's systematic approach particularly valuable. Global liquidity has tightened, ETF inflows have moderated, and bitcoin's correction aligns closely with these broader macro headwinds affecting risk assets. Yet therein lies the strategic advantage of DCA: by maintaining consistent accumulation through periods of difficulty, investors ensure they have established positions before the inevitable shift in liquidity conditions.

History shows that when central banks pivot toward easing and liquidity flows back into markets, these transitions represent some of bitcoin's strongest catalysts - and they typically arrive with little advance warning.

History's Clear Lesson

Perhaps the most compelling argument for DCA comes from bitcoin's own history. In prior cycles—following the 2015 bear market bottom, through the 2019 correction, and during the 2020 pandemic crash—investors who implemented disciplined DCA strategies through drawdowns significantly outperformed those who attempted to time exact bottoms. The latter group often either bought too early and panicked, or waited too long and missed the recovery entirely. DCA investors meanwhile accumulated systematically and emerged with substantial positions purchased at favourable average costs.

There are numerous BTC DCA calculators online that show rough returns based on the amount invested and frequency over a defined number of years. One example is this.

The Path Forward

DCA offers investors three critical advantages in the current environment:

1. Consistent exposure regardless of short-term volatility;

2. Behavioural discipline that prevents emotional decision-making; and

3. The ability to harvest volatility by accumulating more Bitcoin when prices are depressed.

Given today's liquidity reset, normalised valuations, and mid-cycle positioning confirmed by on-chain data, DCA represents a rational, evidence-based strategy for long-term investors positioning themselves for 2026 and beyond.

The market will continue to fluctuate, headlines will provoke anxiety, and short-term traders will debate daily price action. Meanwhile, DCA investors will do what systematic accumulators have always done during periods of uncertainty: they'll continue building positions, trusting the process, and allowing time and structural forces to work in their favour.

Monochrome Asset Management is a specialist investment management firm offering leading regulated access to crypto-assets. Explore how we are making Bitcoin investing more accessible for Australian investors here.