Friar Hass was our guest today on the Relai Bitcoin Session podcast. Friar Hass is an outspoken Bitcoin maximalist and dollar-cost averaging proponent. He lives in Australia and has amassed a substantial social media following as a bitcoin DCA evangelist.
We sat down with Hass to talk about Bitcoin and dollar-cost averaging.
You can watch it here:
Or listen to it here:
To kick-off the show, Hass explains what dollar-cost averaging is and how people can use it as an investment approach for bitcoin.
What Is Dollar-Cost Averaging?
Dollar-cost averaging is a common investment strategy used in traditional markets that enables investors to remove volatility from an investment.
“DCA is neither good nor bad. It can bite you in the near or it can save your rear. But what it does ensure for you is the elimination of all bias psychology if you are committing to buying on a regular basis as well as smoothing out the volatility curve,” Hass explains.
How bitcoin dollar-cost averaging fits into your personal investment strategy depends on your risk tolerance. Some people buy a large amount in one go, others like to split their purchases up into small buys. Conversely, some like to buy a large amount with half their capital and then DCA weekly or monthly with the other half, Hass continues to explain.
Auto-DCA Gives You “Bitcoin Zen”
Hass goes on to explain that setting up automated bitcoin purchases gives you peace of mind as a bitcoin investor, which is why he is a big fan of this investment approach.
“Auto-DCA increases your bitcoin Zen. You can stack on auto-pilot without thinking about the price. It just shifts your dirty fiat into sats.”
Trying to time the market is incredibly difficult and psychology plays a major role. Hass explains that when he started investing in bitcoin in late 2013 and failed to buy the dips as market psychology came into play.
“Had a split up my buys to regular DCA purchases at that time, I would now have four times the amount of bitcoin I have today.”
Value-Averaging vs. Dollar-Cost Averaging
Value-averaging is another strategy – and the opposite of DCA – that bitcoin investors could adopt.
As opposed to buying, for example, €100 worth of bitcoin every week (i.e., dollar-cost averaging), you could buy one million satoshis every week, regardless of the price.
Hass has not seen bitcoin value-averaging “in the wild.” He believes that approach would be more for investors who denominate their portfolios in bitcoin as opposed to fiat currency.
Dollar-Cost Selling Bitcoin?
20 years down the road, when Bitcoin has taken over the world, Hass could see himself dollar-cost selling $1,000 worth of bitcoin every week to cover his living costs.
Once one bitcoin is worth over a million dollars, taking out money every week makes more sense than selling a whole coin for one million in one go. You can pay your bills and live your life off your bitcoin returns.
Setting Bitcoin Price Targets and Avoiding the “Trading Trap”
Hass goes on to talk about the price targets he has set for himself for when he plans to cash out some of his bitcoin to avoid falling into the trading trap.
“It’s important for “normal people” not to fall into the trading trap. Normal folks have to resits the casino as much as possible.”
“The boring stack sats every day is tried and tested and works. You may not make a 10x gain but you will never make massive losses,” Hass explains.
Why Bitcoin is Great for Dollar-Cost Averaging
Hass explains that auto-DCAing bitcoin is much cheaper – in terms of transaction costs – than stocks, for example.
While this differs from country to country, most stockbrokers tend to charge more for trading traditional assets than bitcoin exchanges charge for bitcoin purchases.
Hass explains that DCAing on an exchange in Australia is much cheaper for him than DCAing stocks would be due to the brokerage fees for stocks “down under”.
Additionally, bitcoin’s big price swings are another reason to dollar-cost average. In times when the price crashes, people often it hard to buy. With auto-DCA, you are buying no matter where the price is.
Finally, he explains that bitcoin is the only cryptoasset he is dollar-cost averaging because he believes it will be there when he turns 50.
“Bitcoin is both savings technology and a speculate asset while other coins are just straight speculative assets.”
You can take a punt on something like Ethereum – and just buy some on an exchange – if you want to, but it’s not something he would DCA, Hass concludes.