It's safe to say that Bitcoin (BTC) is entering bear market territory

It's safe to say that Bitcoin (BTC 5.12%) is entering bear market territory. It's now down 30% from its January highs, and investors are understandably rattled.

As Bitcoin (BTC 5.12%) continues to slide and enter bear market territory, many investors are feeling rattled. Wasn't 2025 supposed to be the year that Bitcoin skyrocketed in value on its way to $1 million?

If you're feeling nervous about Bitcoin during a market decline, the good news is that there is a tried-and-true investment strategy that seems to be tailor-made for the current situation in the financial markets.

What is DCA?

That investment strategy is dollar-cost averaging (DCA), and it can be an important tool for crypto investors to capture Bitcoin's long-term price performance. At its core, DCA just means that you commit to buying a fixed amount of a certain asset on a regular basis, over an extended period of time. The buying schedule does not change as prices go up or down. You just buy fewer shares or coins when they're expensive, and more of them when prices are low.

For example, you might decide to invest $50 in Bitcoin every month. Like clockwork, you will then buy $50 worth of Bitcoin every 30 days, regardless of what's happening in the broader market. It doesn't matter if Bitcoin is moving up, moving down, or trading sideways.

Should you DCA into Bitcoin?

In August 2024, Bitcoin Magazine took a closer look at a potential DCA Bitcoin strategy for crypto newcomers. They found that, by investing just $10 a week over the most recent five-year period, you could have turned $2,620 into $7,913, for a staggering five-year return of 202%.

Things get even more interesting when you consider how other assets performed over that five-year period. For example, if you had invested $10 a week into gold over that same five-year period, your total return would have been just 34.5%. If you had invested $10 a week into the Dow Jones over that time period, your return would have been just 23.4%. And if you had invested $10 a week into Apple, your total return would have been 79.1%.

So how did Bitcoin manage to trounce the performance of other assets over this five-year time period? The key is Bitcoin's volatility. It's capable of much higher highs -- and much lower lows -- than other assets. Thus, when Bitcoin fell off a cliff in 2022 and lost 65% of its value, you were able to buy Bitcoin at rock-bottom prices for an extended period of time. Then, when Bitcoin skyrocketed in value in 2023 and 2024, you were able to benefit from rising prices.

A real-world example of Bitcoin DCA

And what if you decided to buy Bitcoin daily instead of weekly? Well, the returns are even more impressive. As Michael Saylor, the founder and executive chairman of MicroStrategy (now known as Strategy), has pointed out, you could have theoretically turned $98,000 into $2.2 million, if you had embraced a $30-per-day DCA strategy over a nine-year period from 2016 to early 2025. During that time period, Bitcoin increased in price from $800 to $108,000.

Image source: Getty Images.

Thanks to a modified Bitcoin DCA strategy, Saylor's company has become the largest corporate holder of Bitcoin in the world, with 528,185 Bitcoins on its balance sheet as of March 30. Strategy has been steadily buying Bitcoin since August 2020. There have been plenty of zigs and zags along the way, but Strategy's core Bitcoin holdings are now valued at approximately $40 billion.

Before you DCA into Bitcoin...

At this point, you might be wondering: What's the catch? Why isn't everyone trying to DCA into Bitcoin, if this strategy is so great? The catch is simple: You need to be prepared to deal with tremendous volatility and you need to be extremely disciplined.

As Bitcoin investors like to point out, you need to have "diamond hands." In short, you need to be able to check your crypto holdings, see a screen full of red, and not be tempted to sell your Bitcoin. You need to be able to face the skepticism of your friends, family, and colleagues, when the whole world is telling you that Bitcoin is collapsing in value.

It won't be easy. After all, there have been at least five periods in Bitcoin's history when it has lost 77% or more of its value. And here's the thing: Nobody really knows if we're in the middle of one of those drawdowns right now. Bitcoin is down