Bitcoin Dollar-Cost Averaging Outperforms S&P 500 in 5-Year Backtest

Historical backtesting reveals that a weekly $250 dollar-cost averaging (DCA) strategy into Bitcoin, starting in January 2019, would have yielded a cumulative return of 62.9% by early 2024, resulting in a total profit of $42,508. Over the same period, an equivalent DCA investment in the S&P 500 index would have returned 43.6%, with a cumulative profit of $37,470. Bitcoin's DCA performance significantly outperformed the S&P 500, with a difference of nearly 19 percentage points.

However, if the DCA starting point is delayed to January 2024, with Bitcoin prices at elevated levels, the strategy is currently in a 6% unrealized loss. This indicates that even with the same investment method, entry timing has a decisive impact on short-term returns.

Based on the power-law price model proposed by Sminston With, Bitcoin Well's DCA simulator predicts that a weekly $250 DCA investment starting in January 2026 would accumulate approximately 0.30 BTC by March 2030. Assuming a median price of $430,278 in the model, this holding is projected to be worth approximately $129,000, with a total investment of $54,250. The model also provides a lower bound of approximately $274,000 and an upper bound of approximately $900,000, reflecting the power-law model's high sensitivity to input assumptions. It is important to note that all of the above predictions are based on the assumption that Bitcoin will continue its historical logarithmic growth trajectory, and whether this premise holds true in future market cycles remains uncertain.