Dollar cost averaging strategy may be best way of investing in assets if you are not ready to invest too much time in research
One of the most popular bitcoin investment strategies is dollar cost averaging, which requires constant purchases of assets if their price gradually decreases over time. The strategy allows covering losses when an asset enters an uptrend or not.
The main advantage of DCA is the lack of expertise one needs to successfully gain significant profits in the long term. Despite the almost 80% correction on BTC, investors who purchased the asset back in 2018 or even 2019 are still in some profit.
Thanks to the volatility of the first cryptocurrency, it is possible to cover almost 100% of one’s own losses after each correction cycle by buying local tops. But to do so, an investor will need some knowledge about market structure and technical analysis. The simpler version of the strategy is to buy assets on fixed dates.
Strategy’s results
As we have mentioned, a popular way to expose yourself to a certain asset is to purchase it on a certain date. Smaller retail investors sometimes prefer purchasing BTC every Monday throughout the year.
For example, the average price during 2016-2019 for the average investor would be $1,494. If one were to enter the market relatively late, in 2020, their average entry would be $18,373, putting investors at a profit at the current BTC price.
One of the most profitable and yet realistic entry ranges would be 2017-2020, the cycle in which Bitcoin went through the first wave of adoption. The average entry price for an investor in the “ICO era” would stay at approximately $4,378.
At press time, bitcoin is changing hands at $19,792.
