What should you DCA? Why I only DCA the large caps

"Zhou An, which coin do you DCA? Can I buy along with you?" — I get plenty of these messages. My answer each time is a little disappointing: I only DCA the large caps, and I won't tell you what to buy. The reason isn't that I'm hoarding a secret; it's that I genuinely believe the question "what to DCA" should be answered with risk logic, not with whose shout you follow.

This piece lays out my selection logic. You don't have to copy me after reading it, but I hope you'll learn to judge for yourself whether a thing deserves a spot in your DCA plan.

Up front: I don't recommend coins

I don't predict price, I don't say who'll rise or fall, and I won't give you a "watchlist." For one, I don't have that ability — I often can't even be sure when I should sell my own holdings; for another, I know all too well how people lose money buying along with someone else's shout, and I don't want you to repeat my mistakes.

So everything below is about the logic of choosing an asset and risk common sense — not investment advice. I mention BTC and ETH because they're unavoidable examples when discussing "large caps," not because I'm telling you to buy them. Whether to buy and how much is always your own decision, and the consequences are yours to bear.

DCA's logic decides what asset it fits

Before figuring out "what to buy," you have to go back to what DCA is even for. DCA bets on time: buy a fixed amount at fixed times continuously, relying on long-term continuous investment to average your cost to a middling spot while enduring the violent volatility in between. All its upsides rest on one implicit premise — this thing can exist long-term and trends up over the long run.

Once that premise breaks, DCA flips over immediately. If a thing ends up at zero, the more you persist in DCA'ing, the more money you put in, and the more completely you lose. So the question "what to DCA" is, at heart, equal to: which things will most likely live long enough, surviving cycle after cycle of bull and bear? The answer naturally points to the assets with the broadest consensus, the best liquidity, and the hardest to wipe out lightly.

Why I only DCA the large caps

By "large caps" I mean assets like BTC and ETH — the highest market cap, the longest existence, recognized by the most people. I only DCA them, for three reasons, all coming from risk.

One, they've lived long, fitting DCA's long-term premise. Bitcoin has run from 2009 to now, ethereum has run for a good number of years too, and they're still alive after multiple deep bears. That "track record of surviving," while it guarantees nothing about the future, at least shows they're not the kind of thing that vanishes in a gust of wind. A long run like DCA needs an asset that can run the whole way with you.

Two, relatively manageable volatility (note: only relatively). Large caps fall frighteningly too — after bitcoin's high of around $69,000 in November 2021, it at one point dropped to about $15,500 by November 2022, a fall of roughly 77% (data from public market records). But compared with small coins that routinely fall 95% or go to zero, large-cap drawdowns have at least bounced back historically. DCA can withstand being underwater; it can't withstand going to zero.

Three, good liquidity, so I can stop whenever I want. Large caps can be bought and sold anytime, with small spreads. Small coins are often easy to buy and hard to sell; when you actually want to leave, there may be no one to take it. For a DCA plan that may run for several years, that "able to get in and out" matters.

Why altcoins don't suit DCA

I have no bias against altcoins, but I'm clear that they simply don't match DCA's logic.

The most core point: the vast majority of altcoins don't live to see the long term DCA needs. Every bull market spawns a big batch of new coins, and once the bear passes, many of them have gone silent and to zero. DCA'ing into something that will go to zero is pouring money continuously into a pit that's destined never to fill — the more diligently you DCA, the more you lose. This isn't a question of bullish or bearish; it's a math question.

A few other things don't match either: altcoin volatility is more extreme, and DCA's benefit of averaging cost gets eaten by the huge uncertainty; many altcoins have poor liquidity, so when you want to hold long-term and then exit, you may not be able to leave; their stories turn over too fast, and today's hot narrative may have no one talking about it next cycle. DCA is a "slow" and "steady" game, while altcoins' nature is "fast" and "gamble" — stuff fast and gamble into a slow-and-steady frame, and both sides' merits vanish. On whether altcoins should be touched at all and how much, I wrote separately in Should you touch altcoins? How big a slice won't break you.

Within the large caps, how I split

Even choosing only within the large caps, there's still a "how to split" question. Here too there's no standard answer; I'll just describe common practices and the thinking behind them, and you weigh it yourself.

• DCA only one. Many beginners simply DCA only bitcoin — simple, low-hassle, and not wrong. The fewer assets, the less you agonize and fiddle over the split.
• Split between BTC and ETH. For those wanting a touch more diversification, a common practice is giving bitcoin a larger share and ethereum a smaller one. The proportions depend on your judgment and tolerance; no one decreed it has to be any particular ratio.
• Don't add altcoins for the sake of "diversification." This is what I want to stress: adjusting proportions within the large caps is diversification; stuffing altcoins in isn't diversification, it's adding risk to your DCA plan. If you genuinely want portfolio-level diversification, that calls for a different approach.

If you want to gamble on altcoins, don't use DCA money

I'm not saying you absolutely can't touch altcoins. People have an urge to take a gamble, and that's perfectly normal. I've kept a small bit of money to play with myself. But I keep it completely separate from DCA:

The DCA money runs the "long-term, large-cap, disciplined" track; the money I want to gamble on altcoins with, I treat as a one-off small attempt I'm fine losing entirely — never DCA'd, never added to, never drawing on the money in the DCA account. That way both sides are clean: DCA isn't polluted by altcoins' high risk, and a gamble that loses won't wreck my long-term plan. In When to leave, when to admit you're wrong I discussed how to set rules in advance for this kind of gamble money.

Recap: pick an asset by whether it fits the long term first

To wrap this into one sentence: what to DCA shouldn't be asked as "which will rise," but as "which fits the long term." Large-cap assets that can exist long-term, with good liquidity and broad consensus, are what match DCA's logic of betting on time; altcoins have a high zero rate and a fast-and-gamble nature, and stuffing them into DCA only pleases neither side.

I won't pick a specific one for you or how much each takes — that's a matter of your judgment and your tolerance. What I can give is this sieve coming from risk. If you want to gamble on altcoins, use a separate batch of money you can afford to lose, and draw a clear line from DCA. That way, your DCA is truly DCA.