Bitcoin prices and a number of other digital assets have appreciated significantly over the past decade. Some people have made millions and even billions from everything they have during the early days of price discovery in the cryptocurrency. However, there is another method of investing called dollar-cost averaging or DCA, a scheme that is considered to be much less risky and can still bring a cryptocurrency investor decent profits in the long run.
Since bitcoin jumped over the cryptocurrency all-time high (ATH) recorded in 2017, the digital currency continues to accumulate higher value after crossing the $ 20k zone. Then bitcoin (BTC) tapped a new ATH ten days ago, after the crypto asset jumped over the $ 42,000 range. Additionally, a number of alternative digital assets are approaching their 2017 ATHs and some newer coins such as Dot and Chainlink also hit price spikes.
Now there are many people who have been able to invest bitcoin, ethereum, bitcoin cash, and many other currencies in the beginning, and this has provided significant profits for these risk takers. But there is another investment method that people have been taking advantage of for a long time called dollar-cost averaging or DCA.
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Essentially, the DCA purchase method involves buying a fixed amount of cryptocurrency at regularly scheduled intervals. This contrast is very different from throwing all the money down at once and waiting for a profit. An example of DCA purchases is to buy $ 10 in bitcoin per week, for a period of three years or more.
Buying in this way is considered less emotionally taxing and also much less risky. The planned buying intervals take place regardless of the cost of bitcoin (BTC) or the other cryptocurrency costs at the time. Then, if you add together the number of purchases per week and the standard price of the purchases over the three-year period, the investment cost is measured in a mean average.
Additionally, depending on the cryptocurrency’s market performance, a DCA investor can do extremely well for themselves in a much slower and less risky way.
There is also a website that can help you estimate the purchase interval over time and the average average over the period. The web portal dcabtc.com provides a calculator to calculate your DCA metrics over time, and if you’ve already taken advantage of DCA investments, you can get the profit from your current BTC investment.
Here’s a great example of DCA purchases over time with an investment of $ 1 per week in BTC for the past nine years. Dcabtc.com explains that buying $ 1 of it BTC since January 2012, every week for nine years from nine years ago, $ 470 would have turned into $ 289,295 based on current exchange rates. That’s a whopping 61,452% in value over a nine-year period.
If the person started three years ago and invested $ 10 a week in it BTC for the past three years, it is said to have increased by 361% every week. That method of DCA purchase would have made $ 1,570 turn into $ 7,249 over the three-year period. Of course, the period in which you start investing makes a difference to both DCA and throwing out all the money all at once.
Timing is essential, and sometimes it doesn’t make a difference either, due to bitcoin’s price fluctuations. A good example of this is if someone has invested a large amount in it BTC On March 12, 2020, at a low of $ 3,800 per unit. Using the current BTC exchange rate shows that investments would yield a whopping 821% over the time to January 17, 2021.
The dollar cost average is still much less stressful, as a person can invest without putting a lot of emotional energy into playing the lows and highs like the aforementioned flat-rate investment. DCA investors don’t have to put a lot of time and effort into studying market charts, keeping an eye on breaking crypto-related news stories, and keeping up with the industry’s heavyweights. The money is simply invested without much time-consuming activities, and the investment can be calculated over longer periods without much worry.
The crypto investor who counts with a DCA approach doesn’t care that the market is unpredictable and the stress of trying to phase out crypto markets is insurmountable. Throwing everything out at once and trading cryptocurrencies successfully takes time and research, things that some people just don’t have time to apply.
A DCA investor understands that the price of bitcoin changes very often and that it can be difficult to hit highs and lows. But long-term perspectives, logarithmic growth curves, and in general rising interest, holding digital assets for a long period of time shows an extremely profitable way of investing so far.
What do you think about the dollar cost average? Do you use this way of investing or do you trade highs and lows during the day? Let us know what you think in the comments below.
Image Credits: Shutterstock, Pixabay, Wiki Commons, lookintobitcoin.com/charts, Twitter, dcabtc.com,
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