Dollar-cost averaging (DCA) is an accumulation strategy in which you divide your total desired purchase amount into equal-sized portions at regular time intervals.
It can be once a week, once a month, once every quarter, or whenever works best for you – adopting a cost-effective DCA strategy is perfect for long-term investing.
The Best Long-Term Way to Accumulate Cryptocurrency
Adopting a cost-effective DCA strategy is perfect for long-term investors. By dollar-cost averaging, you are effectively negating price volatility.
Implementing a dollar-cost average strategy into your long-term digital asset investment portfolio is highly recommended for volatile assets such as cryptocurrencies like Bitcoin (BTC) and Ether (ETH) since one’s purchasing price becomes averaged out over time.
Nobody can truly know for sure if now is a good time to buy – that is why dollar-cost averaging is so effective.
Advantages of Using a Dollar-Cost Average Strategy
The main advantage of using this method is that you will be less worried about the buying price than you otherwise would be.
Another advantage of this method is that it is very suitable for ongoing investment, such as investing a small portion of one’s salary every month.
For example, the nice thing about BTC, ETH, and many other cryptocurrencies is that, unlike stocks and equities, it is possible to buy fractions of a whole coin – allowing users to buy as little or as much as they can afford.
There are enough satoshis (the smallest unit of Bitcoin = 0.00000001 BTC) for everyone, and there is no minimum purchase requirement!
Disadvantages of Using a Dollar-Cost Average Strategy
The disadvantage of the DCA method is that this strategy sacrifices maximum profits in optimal bull-market conditions.
However, throughout history, there have been many periods during which DCAing in the US stock market yielded a higher profit than a lump sum investment.
Another potential disadvantage is the persistence required to consistently purchase a fixed amount of a cryptocurrency over time, even if it becomes tempting to buy more when the price is low or vice-versa (selling everything as soon as the price is up).
Should You Dollar-Cost Average?
By no means is the DCA strategy limited to crypto-assets such as Bitcoin and Ether – but it perfect for accommodating long-term cryptocurrency investors.
Although some might call it boring, implementing a DCA strategy is a tried-and-tested way to (almost) guaranteeing the long-term success of your investment portfolio.
You are not a magician who knows when to buy and when to sell. Nobody can perfectly time the market, and for that reason, wise men invented the dollar-cost average method.
Disclaimer: Just as with anything both inside the crypto-verse and out, nothing is a guaranteed, 100% for-sure thing. When making any major or minor financial decisions, the reader is advised to DYOR (do your own research) and come to your own conclusions.
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