Bitcoin Entry in Tranches: Less Risk, at What Price?

Once a Bitcoin allocation has been decided, the question of implementation remains: invest immediately or spread the purchases over several dates? A staged build-up is meant to reduce dependence on a single purchase date. If prices rise in the meantime, however, part of the intended capital initially remains uninvested and does not participate in the price gains. The analysis uses historical data to examine how the two effects played out. What is considered is the capital earmarked for Bitcoin, including the not yet invested residual cash, not the entire mandate portfolio.

The result: staging changed entry risks and final wealth, but offered no reliable return advantage. After twelve months, both the median and the mean of the final-value differences were negative relative to immediate investment, with a larger shortfall on average; the differences between individual start dates were, however, considerable. A longer build-up lowered the median of the maximum drawdown.

The test set-up

All variants start with the same fully available capital of 100,000 euros. During the build-up phase, the part not yet invested remains as non-interest-bearing euro cash. This is a deliberately simple assumption: it avoids committing to an interest rate that changed greatly over the period examined. Four purchase plans are compared, each beginning on the start date:

• Immediate investment: the entire amount on the start date.

• Ten weekly purchases: 10 per cent each, the first purchase on the start date, the last after 63 days.

• Three monthly purchases: one third each on the start date and after one and after two months.

• Six monthly purchases: one sixth each on the start date and after one to five months.

The basis is the daily closing prices of Bitcoin in euros. The start date is the day of the first purchase; subsequent purchases follow the schedule specified for each plan. All month-ends from May 2017 to September 2025 serve as start dates (101 starts for the twelve-month view). As a cross-check, starts on the 8th of each month and on every available calendar day were calculated (twelve-month view). The median shortfall against immediate investment was between 2,000 and 5,000 euros, and thus of the same order of magnitude. Valuation is after 12, 24 and 36 months from the start date. Fees and taxes are not taken into account. Interest on the cash would slightly favour the staged plans. At an illustrative interest rate of 2 per cent per year, it would be around 200 euros after twelve months for the short plans and around 400 euros for six monthly purchases. This order of magnitude lies well below the typical final-value differences (median) of 3,000 to 5,000 euros. The maximum drawdown is calculated for each start date, and the median is then formed from these values.

After twelve months: a median shortfall, with wide dispersion

After twelve months, the median of the final-value differences between each staged plan and immediate investment was a shortfall of 3,000 to 5,000 euros per 100,000 euros of initial capital. On average the shortfall was 9,000 to 21,000 euros, because individual starts ahead of strong price rises caused very large shortfalls. The dispersion was considerably greater: for ten weekly purchases, the difference in the middle 80 per cent of starts lay between −49,000 and +20,000 euros, and for six monthly purchases between −75,000 and +24,000 euros. What was decisive were the prices at the later purchase dates: lower purchase prices allowed more Bitcoin to be acquired, while higher purchase prices led to a smaller Bitcoin holding than with immediate investment.

In hindsight, immediate investment was at a loss after twelve months in 33 of the 101 starts. In these cases, ten weekly purchases achieved a higher final value in 58 per cent, three monthly purchases in 55 per cent and six monthly purchases in 67 per cent. This classification is retrospective; at the start date it was not known which starts would become loss cases. The lowest final value for the staged plans, at 33,000 to 41,000 euros, was higher than for immediate investment (27,000 euros). It comes, however, from different start months and is an individual case, not reliable protection.

Longer observation: differences in the maximum drawdown

After full investment, all plans react identically in percentage terms to Bitcoin movements. The maximum drawdown measured over the whole window nevertheless remains different, because the wealth paths and the peaks before them were different. For short staging (ten weekly and three monthly purchases), the median of the maximum drawdown was only 0 to 4 percentage points smaller than for immediate investment. For six monthly purchases, the gap after 24 and 36 months was around 7 to 8 percentage points.

Over longer periods, too, no consistent final-value advantage of staging emerged: after 24 months the median final-value difference ranged from −9,000 to −5,000 euros per 100,000 euros of initial capital, and after 36 months −8,000 to +2,000 euros. The range grew strongly over time (for six monthly purchases after 36 months, in the 10th to 90th percentile from −135,000 to +116,000 euros). After 24 months, the lowest final value of the six monthly purchases (46,000 euros) was even below that of immediate investment (52,000 euros). A negative difference denotes the shortfall against immediate investment, not a corresponding loss of the initial capital.

What this means for the portfolio decision

Phased investing determines how quickly the planned Bitcoin position is established. In the periods examined, a longer build-up reduced the median of the maximum drawdown, but delivered no consistent return advantage. Whether phased entry reduced or preserved final wealth depended mainly on the price path during the purchase phase.

For implementation it follows that the build-up plan, the handling of the temporary cash and the responsibilities should be fixed before the first purchase. A longer build-up initially reduces Bitcoin exposure. In the analysis it went along with a lower median of the maximum drawdown, but guaranteed neither a limitation of losses nor a higher final value. Whether staging fits the risk-bearing capacity and client communication is a question for the mandate. The analysis measures the capital earmarked for Bitcoin including residual cash, not the entire mandate portfolio, and says nothing about the appropriate size of the crypto allocation.

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Data basis and limitations: Daily closing prices, BTC/EUR, 8 May 2017 to 18 October 2026 (daily cut-off 00:00 UTC). Start dates are month-ends, 101 / 89 / 77 starts for 12 / 24 / 36 months. The observation periods overlap heavily and are therefore not independent. The shares and percentiles shown describe the historical sample, not future probabilities of success. The euro cash is non-interest-bearing, and fees and taxes are not taken into account (see the test set-up for the order of magnitude of the interest effect). The period examined contains several market phases with an overall strong upward drift of Bitcoin; the results apply to this historical development at one trading venue and are not a forecast. Only Bitcoin was examined. The maximum drawdown is the largest percentage loss from a previously reached peak of the total value of Bitcoin and residual cash to a subsequent trough, calculated from daily values. Past performance is not an indication of future performance.

No investment advice. Market observation only.

A contribution by 21Nexus. The content is for general information and context only. It constitutes neither investment advice nor a recommendation to buy or sell financial instruments, and does not replace individual advice.