What is Dollar-Cost averaging(DCA)?
Dollar-cost averaging is the process or strategy where investors put a certain amount of money in any kind of shares market, cryptocurrency market, or bond basic. An investor puts money for the long-term, not for the short-term, an investor does not care about short-term volatility in markets. It eliminates an emotional decision so that you can sleep well. Furthermore, the investor does not care about the chart or news in the markets.
Important
“Please be aware that our discussion here is only for educational purposes. We don’t provide investment advice, and this article shouldn’t consider trading and investment advice. Every time you research any personal investment is good for you, your risk tolerance, and your financial means before jumping into a transaction. If you have a doubt, please consult with a financial adviser.”
Dollar-Cost Averaging for Cryptocurrency and Share markets
Dollar-cost averaging can be very useful for Cryptocurrency, cause they are very volatile. However, the limited supply and demand for cryptocurrency are increasing year by year; the price has to rise at least for the long term. Timing the cryptocurrency markets is difficult when looking at this, on a scale of a year. The crypto market has grown exponentially. Long-term investment can be an excellent choice rather than a short-term investment. DCA is also considered a less risky way to invest. To do a Dollar-cost averaging strategy, we should have discipline and long–term planning to hedge against significant market movements up or down.
LiteCoin (LTC)
If you put $100 a month in LiteCoin (LTC) using Dollar-cost averaging, you would have ended up making a profit of $10,924 in one year where you have only invested $1,200.
This image shows a LiteCoin Case Study (Dollar Cost Average) ($10,924 Profit, where only $1,200 was invested.)
When the price of LTC is low, then you buy more Litecoin(LTC) which increases the potential to make more profit after it recovers and when the cost of LTC is rising then it buys less LTC so that it lowers your risk.
Bitcoin(BTC)
One website called http://dcabtc.com shows an excellent example of the past performance of BTC.
Picture: Dollar-cost averaging strategies for Bitcoin (BTC) (Data were taken from (http://dcabtc.com)
According to this website. Let’s say you purchased $10 worth of Bitcoin/Week nine years ago till now, you would have accumulated approximately $26 Million worth of Bitcoin where you have only invested $4,700. For more information, you can go to their websites: (http://dcabtc.com).
I believe that we have to learn from the past, and we also can use this strategy to increase our portfolio for the long term. Let’s see how we can do dollar-cost Averaging in Cryptocurrency. Mainly, I am going to show you how you can buy cryptocurrency using dollar-cost averaging in coinbase.
How to do Recurring buy-in Coinbase?
I consider that you already have a coinbase account. All you must do is choose the asset you want to buy, specify an amount, and choose a daily, weekly, or monthly schedule. Coinbase will then automatically repeat that purchase until you change or cancel it.
If you don’t have an account:
Create a coinbase account now.
Recurring Buys in Coinbase
Conclusion
In final, Dollar-cost averaging will work for cryptocurrency as well, and when markets are volatile it will give us peace of mind.
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