Dollar-cost averaging (DCA) calculator for Ethereum (ETH) backtesting
Visualise and calculate historical returns of investing $100 in ETH every 7 days from Jan 2020 until now
Value in FIAT
in 4 years
ETH selling price
1st order $127.05
Over 192 instalments of $100, every 7 days
Earnings over time
Estimate the development of your earnings over time
ETH price over time
Price development vs. average cost
Profit/Loss every 7 days
Based on your purchase interval you would make profit 97% of the time
What is Ethereum?
Ethereum is a decentralized, open-source blockchain platform that enables developers to build and deploy smart contracts and decentralized applications (dApps). It runs on a global network of nodes, making it highly secure and resistant to censorship. Ethereum introduced the concept of programmable money, allowing users to interact with the blockchain through self-executing contracts, also known as smart contracts. Ethereum's native currency, Ether (ETH), powers these contracts and facilitates transactions on the network.
What is ETH and why does it have value?
ETH, or Ether, is the native cryptocurrency of the Ethereum platform. It is used to pay for transaction fees and computational services on the network. ETH also serves as a digital store of value due to its decreasing issuance rate, collateral for crypto loans, and as a payment system in various financial apps built on Ethereum. Many people also view ETH as an investment, similar to Bitcoin and other cryptocurrencies.
What is Ethereum used for?
Ethereum's primary use is for executing smart contracts, which enable various applications, such as decentralized finance (DeFi), stablecoins, non-fungible tokens (NFTs), and decentralized autonomous organizations (DAOs). These applications are built on top of the Ethereum platform, providing a wide range of financial services, digital asset management, and even tokenization of real-world assets like real estate and art. The platform is also home to thousands of tokens, each with its unique use case and value and hosts internet communities governed by token holders, further expanding the potential of decentralized organizations.
What are Ethereum tokens?
Tokens are digital assets created and traded on the Ethereum platform. They represent a wide range of use cases, including stablecoins that mirror the value of traditional currencies, governance tokens representing voting power in decentralized organizations, collectible tokens (NFTs) for digital art or unique assets, and various utility tokens with specific functions within their respective ecosystems. Ethereum is home to thousands of tokens, with developers constantly building new tokens that unlock new possibilities and open new markets.
What are smart contracts?
Smart contracts are self-executing computer programs that live on the Ethereum blockchain. They are triggered by transactions from users or other contracts and enable complex applications and interactions on the platform. Smart contracts form the basis of decentralized apps (dApps) and are immutable, meaning they cannot be altered once deployed. They provide transparency, security, and automation, and are used in various applications like lending platforms, decentralized exchanges, insurance, crowdfunding, and more.
Who created it?
Ethereum was proposed by Vitalik Buterin in 2013 and officially launched in 2015, following a successful crowdfunding campaign. It has since been developed and maintained by the Ethereum community, consisting of developers, researchers, and enthusiasts worldwide.
What was The Merge and why was it important?
The Merge was a significant upgrade to the Ethereum network, transitioning it from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism. This event marked the joining of the original execution layer (Ethereum Mainnet) with its new PoS consensus layer, the Beacon Chain. The Merge played a crucial role in Ethereum's development for several reasons:
Energy Efficiency: The Merge reduced Ethereum's energy consumption by approximately 99.95%, making it a more sustainable and environmentally friendly blockchain platform.
Enhanced Security: By adopting the PoS consensus mechanism, Ethereum's security was strengthened as it became less vulnerable to potential attacks, such as the 51% attack, which is more common in PoW networks.
Scalability: The Merge laid the foundation for future upgrades aimed at increasing the scalability of the Ethereum network, allowing it to handle more transactions and support a larger user base.
Decentralization: The switch to PoS incentivized more participants to join the network as validators, further decentralizing the Ethereum ecosystem and reducing the risk of centralization that can occur in PoW mining.
Continued Evolution: The Merge represented a major milestone in Ethereum's ongoing development, showcasing the project's adaptability and commitment to growth, innovation, and improvement.
What is a DCA-CC Calculator and How to Use it?
If you want to test out your investment strategy, you'll need to understand how it works and what you're hoping to achieve. This is where the DCA-CC calculator comes in - it can help you see if your strategy will generate the return you want.
The calculator is separated into two modes: the dollar cost average calculator and the lump sum investing calculator. You can use either one to budget for your investments on a regular basis, or to invest all your money at once.
To use the DCA-CC, start by entering a DCA or lump sum investment amount. Then, select the time period, interval, and investment you want to use. The calculator will show you how your strategy would perform under those conditions. You can also experiment with different parameters to see how they affect your results.
And that's not all! The DCA-CC also lets you see how your investment would fare if you used the lump sum strategy. So if you're not sure which approach is right for you, this calculator can help you compare and make the best decision.
What is DCA (Dollar Cost Averaging)?
DCA is like buying a little bit of your favorite cryptocurrency each week or month regardless of the price. By buying equal dollar amounts at regular intervals, you're helping to smooth out the bumps of a volatile market.
Think of it as when buying a house. When you want to buy a house, you don't just fork over all the cash upfront. You make a down payment, and then you pay the mortgage every month. Over time, the house is yours.
DCA is like that, but with investments. You spread your investment out over time, so you're less likely to buy when the market is high. And just like with a house, you eventually own more and more of your investment.
By buying a little bit of your favorite cryptocurrency each day, week or month, you're making small, regular payments that will help you get the coin you want without waiting for a price dip.
Of course, there is always the risk that the price of the coin could continue to fall. However, this risk can be mitigated by using DCA when the market is trending upwards.
How to use DCA-CC to backtest your dollar cost average strategy?
Do you want to know how effective your dollar cost averaging strategy would have been in the past? The DCA-CC calculator can tell you for sure!
This tool is designed to help you backtest your investment strategy, so you can compare it against other strategies and decide which one is best for you.
When you first use the tool, we'll make some assumptions about your potential investment. For example, we'll assume you're investing $10 in bitcoin every week for the past three years.
Of course, you can change the parameters at any time to get more accurate results. So why wait? Use the DCA-CC calculator tool now and find out how your investment strategy would have fared in the past.
Top 3 cards
Value in FIAT, BTC selling price and Total investment cards are the easiest to understand. However, we'll give a little more explanation:
What is DCA Value in FIAT card?
The Value in FIAT card is a great way to see the value of your investments after a dollar cost averaging period. This card can help you understand how DCA affects the value of your investment over time.
The scale on the lower part of the widget displays the investment to interest ratio. In other words: it shows how much of your investment is lost or how much was added to your investment due to the earnings.
What does the DCA Value in FIAT card show?
This card lets you know how much your cryptocurrency is worth in Fiat currency at the end of your investment period. In other words, the price you sell it at.
The card also shows you the price of your first order, so you can see how the market volatility affects your investment over time.
Lastly, the card shows the ratio of the selling price to the average price. This is helpful in determining the value of your investment strategy and how it impacts the selling price.
What is a DCA Total Investment card?
The total investment card calculates how much money you would have invested, given an initial investment and an investment interval, over a specified period of time.
For example, if you invest $100 every month for 3 years, the total investment card would show you how much money you would have invested at the end of those 3 years.
We are presenting two charts here: a chart of earnings over time, and a chart of price over time. These charts can help provide context and perspective, and allow you to see what would be different if you entered or exited the market at a different time.
Earnings over time
This chart shows how much money you've made over time from your investments. It includes your balance in FIAT (the dollar equivalent of cryptocurrencies) as well as your total investment up to that day.
BTC price over time
This chart shows the price of a given cryptocurrency over time, as well as the average cost of a cryptocurrency on any given day.
This chart can help you understand the value of dollar cost averaging as a strategy, and how it may impact your earnings.
What is a Fact card?
The Fact card is an automated message that summarises all the information from all the charts in a short, sharable sentence.
What is Profit/Loss card?
The Profit/Loss card is a tool that can help you to better manage your risks by understanding how often you might be making a profit. As with everyhing else here, this card can provide guidance and clarity in your decision-making process.
What is Purchase history?
What you'll find here is a table of purchase data, which includes information like how much cryptocurrency you could buy with the money invested on a given day, or how much you would have profited or lost at a given point in history.
What is Lump Sum Investing strategy?
Lump sum investing strategy is a method of investing where you invest a fixed sum of money all at once. This is in contrast to dollar-cost averaging, where you spread your investment into several installments over a period of time.
Lump sum investing has its pros and cons. On the plus side, you only have to make the investment decision once. And, if you’re investing in a volatile asset like cryptocurrency, you may benefit from buying when prices are low and selling when prices are high. On the downside, you could end up buying at the top of a market bubble – and we all know how those end.
So, should you go with lump sum investing or dollar-cost averaging? That depends on your investment goals and your personal risk tolerance. If you’re the type of person who can stomach the ups and downs of the market, and you believe in the long-term potential of the asset you’re investing in, then lump sum investing may be the way to go.
How to use DCA-CC to backtest your lump sum investment strategy?
DCA-CC is a powerful, easy to use backtesting tool that can be used to test and optimise your investment strategy.
The DCA-CC calculator will help you calculate the performance of your investment strategy across different market conditions.
You can also compare your performance against other strategies such as dollar cost averaging.
It's easy to use and only takes a few seconds to set up.
Here's how it works:
Enter the amount of money you want to invest.
Choose the cryptocurrency you want to invest in.
Choose a time range
Press the "Calculate" button.
The DCA-CC calculator will then show you how much money you would have made if you had invested that money in the cryptocurrency at that price.
Lump Sum Widgets
Both lump sum investment and DCA widgets are very similar, yet the strategy we employ is different. Some data is presented differently, so we will mention only these differences here.
Top 3 cards
As with the DCA strategy, we have three key cards here: Value in FIAT, BTC selling price and Total investment.
What is a Lump sum selling price card?
This card displays the value of the chosen cryptocurrency - the current selling price.
It also displays the ratio of the current selling price to the buying price. This information is helpful in showcase the value of your investment strategy and its impact on your selling price over time.
What is a Lump sum Total Investment card?
The amount on the total investment card will always be different from the investment parameter you entered into the calculator. This is because we calculate the total investment using the DCA strategy. Doing this allows us to show you the impact of investing the same amount of money using two different strategies.
As a reminder, in the DCA strategy, the total investment card takes your initial investment and your investment interval and multiplies it over the time period provided.