My general posture when talking to people about buying bitcoin is that you should buy as much as you can, as fast as you can.
You can't time the market. Even when bitcoin is making new highs, you never know whether it will ever see that price again. DCA works because it gets you out of the easy-to-footgun prediction business. You choose an amount, buy on a schedule, and go about living your life.
That was the case I made in Your Cost Basis Is Not the Chart. But we've been in a bear market for a year now, which begs the question: if you're already buying every week, should you buy more when bitcoin is 20%, 30%, or 50% below its high?
A DCA ladder does exactly that. But can buying more aggressively during drawdowns help you stack more bitcoin with the same amount of money—and get you to financial independence faster?
⚙️ Introducing the DCA ladder
Most people approach DCA as a static purchase: the same amount on the same schedule, regardless of what's happening in the market. It's simple and straightforward.
But what if you could keep that discipline while buying more during drawdowns and less during rallies? The goal would be to stack more bitcoin at a lower cost basis.
Start with a $100 weekly DCA. A ladder keeps that as the baseline, then pairs deeper drawdowns with larger purchase amounts. Each threshold is a rung on the ladder.
When bitcoin makes a new all-time high (ATH), the ladder's reference point moves up with it.
One possible ladder looks like this:
Suppose the prior ATH is $100,000. A Friday price of $95,000 is a 5% drawdown, so the purchase stays at $100. At $85,000, the 15% drawdown activates the $125 rung. At $75,000, the 25% drawdown activates the $150 rung.
As bitcoin recovers, the purchase steps back down through the shallower rungs. The normal $100 purchase remains the floor, and $400 is the ceiling.
You can choose a different baseline, set different rungs, and cap the largest purchase at an amount that fits your plan and capability. The idea is to stack more aggressively as bitcoin falls and less so as it rises.
📊 How the ladder performed
Bitcoin's price history gives us a way to ask two questions: how much more bitcoin would this ladder have accumulated, and would that have improved the return on the dollars invested? Using the ladder above, I compared it with a flat $100 weekly DCA across 80 four-year periods.
The first period began on the first Friday of January 2016. Each new period began one month later, through August 2022, and included 209 Friday purchases. The periods overlap, representing 80 different starting dates.
The ladder accumulated more bitcoin in all 80 periods. Depending on the starting date, it finished with 126% to 267% more bitcoin than the flat DCA. The median increase was 212%.
The flat strategy contributed $20,900 in every period: 209 Fridays multiplied by $100. The ladder contributed between $49,150 and $64,600, with a median contribution of $61,825. Depending on the period, bitcoin was at least 10% below its ATH on 74% to 89% of the purchase dates, so the ladder invested more than $100 on those Fridays.
That means the ladder required an additional $28,250 to $43,700 over four years. The money has to come from somewhere—additional savings, cash held for drawdowns, or dollars that otherwise would have gone into another investment. Across these periods, the ladder required an average contribution of roughly $235 to $309 per week.
Of course, investing more money buys more bitcoin. But the larger stack doesn't tell us whether the ladder earned a better return on each dollar. Its additional purchases happened below the ATH, but not necessarily below the prices captured by flat DCA earlier in the period.
To find out whether the ladder bought more bitcoin per dollar—not merely more bitcoin—we need to give both strategies the same amount of cash.
⚖️ Same dollars, different timing
To make that comparison, I ran the same 80 historical periods again with one change: both the flat DCA and the ladder received exactly $50,000 over the same 209 Fridays. The exact budget isn't important. What matters is that both strategies had the same amount of money to work with.
For the flat DCA, that meant investing $239.23 every Friday. The ladder was less straightforward because using the literal $100-to-$400 purchase amounts would once again require more cash. Instead, I preserved the relationship among the rungs and scaled the 209 purchases so they added up to the same $50,000. A purchase during a 50% drawdown still received four times the weight of a baseline purchase, while a purchase during a 20% drawdown received one and a half times the weight.
This comparison only works in hindsight. After each four-year period, I adjusted the ladder purchases so they added up to exactly $50,000. You couldn't know those exact amounts in advance because you wouldn't know how many drawdowns bitcoin would experience. The test asks one simple question: with the same $50,000, did the ladder buy more bitcoin?
The ladder accumulated more bitcoin in 64 of the 80 periods. Its median advantage was 14.7%, with results ranging from 24.3% less bitcoin to 30.7% more bitcoin than flat DCA.
Removing the extra-cash advantage changed the result from 80 wins to 64. This is the apples-to-apples answer: the ladder's timing improved the outcome in most of the historical periods, but not all of them.
That leaves an obvious question: what happened in the 16 periods when the ladder underperformed?
🚀 When flat DCA won
All 16 losing windows began between February 2016 and May 2017. Every one started before or during bitcoin's run from hundreds of dollars to nearly $20,000, followed by a bear market that never returned to the earlier price range.
Bitcoin can go much farther than you think, much faster than you think, and never look back. Look at the chart over the years. Eventually, there is a price bitcoin never revisits.
The worst result began on November 4, 2016. Both strategies received the same $50,000 and made their final purchase on October 30, 2020. The ladder accumulated 24.3% less bitcoin.
By December 15, 2017, the flat strategy had already deployed 28.2% of its budget. The ladder had deployed only 11.8% because bitcoin spent most of the run-up near new highs, where the baseline rung received the least weight.
The ladder eventually made larger purchases during the drawdowns that followed. Those prices were cheap relative to the 2017 peak, but they were still far above many of the prices captured by flat DCA in 2016 and early 2017.
The ladder waited for a dip. Bitcoin dipped, but not far enough to revisit the prices the ladder had passed up.
That failure is a good example of why my bias remains to buy as much as you can, as fast as you can. Laddering can fail badly during runaway price action. Even when bitcoin is making new highs, you never know whether it will ever see that price again.
🔄 Keep the total contribution fixed
The equal-cash test tells us that the timing rule often helped historically, but its scaled purchase amounts can only be calculated after the four-year window ends. That makes it useful for comparing strategies, not for deciding how much to buy next Friday.
To make the idea usable, the ladder needs to fit within a contribution amount you already know you can sustain. Reaching the deepest rung of the literal bitcoin ladder requires four times the normal contribution during a 50% drawdown.
Another approach is to keep the total investment constant and change the mix of new contributions. Consider someone who invests $400 per week across bitcoin and stocks, with a normal split of $200 to BTC and $200 to SPY.
Instead of increasing the $400 total during a bitcoin drawdown, the next contribution can shift toward bitcoin. This version uses a simpler ladder: $200 BTC and $200 SPY when bitcoin is less than 10% below its high, $250/$150 at a 10% drawdown, $300/$100 at 20%, and $400/$0 at 30% or deeper.
This rule beat a fixed $200/$200 contribution in all 80 windows. Once again, however, the headline result reflects more than timing. Depending on the window, the ladder directed 80.3% to 91.1% of all contribution dollars to bitcoin. When bitcoin outperforms SPY, a strategy that buys much more bitcoin should finish ahead.
The cleaner comparison gave the flat schedule the ladder's exact total BTC dollars and exact total SPY dollars in each window, then spread those dollars evenly across all 209 Fridays. The asset mix was now identical. Only the timing changed.
Under that equal-mix comparison, the ladder won 68 of 80 windows, with a median advantage of 4.9%. The results ranged from a 10.8% loss to a 9.2% gain.
All 12 losses began between June 2016 and May 2017. The fixed-total approach solves the funding problem and the timing rule still helped in most windows, but it can't solve the risk of buying less bitcoin before runaway price appreciation.
🧭 A ladder is a plan, not a prediction
Taken together, the ladder bought more bitcoin per dollar in most of these historical periods. But the 2017 losses show the cost of waiting for drawdowns when bitcoin runs away. If bitcoin is part of how you expect to reach financial independence, accumulating more of it with the same contribution capacity moves you closer to that goal. Flat DCA, increased as your capacity grows, still has the lowest cognitive load.
A ladder adds a rule to your baseline DCA: when bitcoin falls a specific distance from its prior high, the next contribution changes. The goal isn't to predict the bottom. It is to decide whether you can use drawdowns to accumulate more bitcoin without increasing the total amount you have available to invest.
Whether that works for your plan depends on your total contribution capacity, near-term liquidity needs, and what those dollars would otherwise buy. If you fund the ladder by changing the contribution mix, it also depends on how far you're willing to shift new money away from other assets.
The value of the ladder is making those decisions before the drawdown arrives. You don't have to decide how much to buy while the price is falling and everyone has a new prediction.
🛠️ Put the rule into the FIRE BTC Compass
The DCA Ladder Planner in the FIRE BTC Compass is a way to put a plan for increasing your DCA during bitcoin pullbacks into place. You decide how to approach the drawdown before it happens, lay out the plan, and then have a much easier time implementing it and seeing the effects.
The Planner lets you choose the recurring baseline, the drawdown that activates each larger purchase, and the maximum purchase you're willing to make. It shows the prior bitcoin high it is using, the current drawdown from that high, and the purchase your rule calls for today. As bitcoin recovers, the planned amount steps back down.
The plan and financial values stay in your local browser. The Planner is guidance only: it doesn't connect to an exchange or execute purchases for you.
The personalized DCA Ladder Planner is included with Compass Pro for paid FIRE BTC subscribers. Open the Planner, or use the current Compass Pro Unlock if you still need access.
That’s it for this week. Thanks for reading!
Until next time,
Trey ✌️