Dollar Cost Averaging (A Sustainable Method of Investing in Bitcoin)
How do you eat an elephant?
One bite at a time.
If I had only accumulated my way into crypto when I first heard of it, I’d be very wealthy. That didn’t happen. If I had simply been “investing” $50/week into Bitcoin back in 2016, when I first heard of it, $13,000 (the result of $50/week since 2016) would’ve turned into $55,000. Not a bad return.
Dollar-Cost Averaging is investing the same amounts of money at a regular frequency. Employment-sponsored retirement plans do this- take a portion of your paycheck to place into their plan. This approach can be applied to cryptocurrency.
I am still cautious about cryptocurrency. But I also do not want to miss out on it.
Dollar-Cost Averaging is the middle ground.
- It is sustainable. I don’t have to buy a large amount. Consistency is key. Small investments on a consistent basis will compound over time.
- Disciplined frequency means buying at all the price points. But it all averages out to a lower price when compared to buying when the market sentiment is high. When its high, I’ll buy fewer; low, more. This avoids the “buy high (because FOMO)/sell low (because BTC is going down to $0)” reality that many have experienced to great failure. DCA fixes that.
- I can set it and forget it. Set up a periodic, but regular, frequency where you purchase it automatically. An automatic arrangement means you will not try to time the market. You’ll buy the same amount at the same interval (weekly, monthly, etc…).
I don’t know where crypto is going, but all indications are that it will increase. With the DCA approach, you can remain skeptical while also not missing out. Invest what you can. Definitely do not take out a second mortgage and go all in with Bitcoin. Investing with credit does not have a good track record for the average investor. I’d highly recommend staying away from that.
***Disclaimer: I’m not an investment professional. This is not investment advice. Simply an observation. Invest at your own risk.***