Every cryptocurrency investor knows the pain of not being sure of the right moment to invest. Is it too late? What if you buy at the top and the price will crash tomorrow? This investing decision-making anxiety is as old as volatile markets. Fortunately, there is also an equally old solution.
Dollar-cost averaging (DCA) is well-known in traditional markets answer to this very problem.
The good news is that you can automate it on ProBit Global with Deltabadger, but first let's talk about the benefits.
Instead of investing a more significant amount at once, you start small purchases on a fixed schedule, no matter the price. So, for example, you buy $100 worth of Bitcoin every week.
By doing that, you buy a bit more of it when the price is lower and a bit less when the price is higher. You get a fair average price and vastly mitigate the risk of investing. Many people compare it with investing a lump sum at once. Such perspective is limited.
Emotions are the biggest challenge for every investor. Even if investing a lump sum may look attractive on paper, the strategy is only as good as your ability to implement it. Since dollar-cost averaging is so much less risky, it allows you to build a more prominent position than you would be comfortable investing at once. Also, most people have somewhat a recurring income, not a big pile of cash.
When you consider all of that, there is no better approach than DCA.
DCA is famous for a reason. Let the historical data speak. On the tables below, you can see the performance of daily DCA continued for one, two, or three years (always ending on October 9). Many of the currently popular coins are not that long on the market, but let's examine BTC, ETH, and DOGE in different years, and time horizons:
As you can see, even with a 1-year, the odds were really on your side, and the potential upside was much bigger than the possible loss. Two years of DCA look even better. For Bitcoin, it's already a win every time:
With a 3-year horizon, it was really impossible to pick the "wrong October". Only Doge managed to end in red in 2020. However, the next year paid for all the disappointment:
As you can see, despite the huge volatility of the market, with a 3-4 year horizon you can still invest safely. That is the true magic of DCA.
If you follow the crypto-Twitter or read articles in the space, you know that DCA is recommended and mentioned all over the place. However, executing this strategy consistently demands discipline and time. That is why automating it does make so much sense.