Dollar Cost Averaging(DCA) is the Best Investment strategy for Crypto Newbies


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Abstract: Don’t simply ask when the best time to enter the cryptocurrency market is. If you look at the long-term value of crypto asseets, now is the best time to enter. Therefore, choosing the best and most helpful coin/token management tool is key for maximizing investment strategy.

With the arrival of ‘spring’, the ‘long frozen’ cryptocurrency circle seems to have re-energized. The first half of March 2019 showed that BTC daily turnover exceeded USD $10bn, with market activity indicating a clear and obvious rebound.

This should come as no surprise to seasoned investors. Since the birth of Bitcoin in 2008, the cryptocurrency industry has become increasingly recognized by traditional investors — evolving from a mere few lines of code into a vast, global financial phenomenon, with market capitalization peaking at nearly USD$1tn during the 2017 boom.

In 2017–2018, there were many “black swans” phenomenons, however, crypto newbies could hardly catch the “moment” to enter/exit the market at the right time. The most efficient and conservative strategy for crypto newbies is Dollar Cost Averaging (DCA) which is similar compare to traditional financial investment strategy.

Let us provide an example: if one were to invest $1,000 USD per month from January 2016 into an automatic Bitcoin investment fund, by March 2019, the 42 months of investment at $42,000 would have bought approximately 32.5 Bitcoins, at an average cost for each Bitcoin at $1,292.

Even through the 2017 Bitcoin boom and its later crash in 2018, the cost of $1,292 for a Bitcoin is a lot below the current value of approximately $4,000. Moving this investment timeline forward, to the even lower Bitcoin values from 2014 or 2015, would show a truly exponential revenue increase.

The value of Dollar Cost Averaging(DCA) is an investment strategy with the goal of reducing the impact of volatility on large purchases of financial assets, and the volatile cryptocurrency market is no exception.

Luckily, the operations behind DCA investment is relatively simple. All that is required is to take out a fixed amount of money every month from whichever funding stream one chooses, which then buys, for instance, Bitcoin. The pros of this? No short-term analysis and no continuous logical reassessment; ‘no muss, no fuss’. However, it is important to bear in mind that humans are greedy by nature. If one watches the market rise and fall, it takes some effort to overcome the greed and fear of human nature, and choose not to catch up with the rise and fall. It took true nerves of steel, when Bitcoin reached a high of USD$20,000, to dare to continue to invest, to not admit to losing the battle, and to not leave when it waterfalls.

While some crypto-newbies are bullish on the long-term value of Bitcoin, they always seem to want to choose the “best entry point”, with many watching on as they witnessed the 2017 plunge.

However, it turns out that the choice of when one begins to invest has little impact on the final result. Don’t ask when the best time to enter is — if you look at the long-term value of crypto asset, the best time to enter is always NOW.

Warren Buffett, the king of security investment, is very much in favor of the “Dollar Cost Averaging investment” strategy, and his famous “snowball” theory is anything to go by:

“Life is like rolling a snowball. The most important thing is to find snow wet enough and slopes long enough. At first, the snowball is small, but as it keeps rolling, and as long as snow keeps sticking to it, it will end up getting bigger and bigger.”

In our case, wet snow is a metaphor for a high annual return, a long slope a metaphor for a long time to add value to compound return. Buffett believes that the longer the investment, the greater the impact of compound return. And the most important factor in leverage is time, so for long-term bullish assets, investment will always favor the early adopters.

A proper coin-holding tool is an important helper for your Dollar Cost Averaging (DCA) investment.

Because of the special properties of crypto assets, owning a private key means that you are in control of your assets. Whether it’s ten bucks or a billion, all it will ever be is a string of dozens of bytes of private key. Choosing a safe and reliable way to store digital assets is an important tool for DCA investment.

Most long-term investors will choose to place their assets in a cold wallet and, in effect, there is a more appropriate form to do this safely: crypto assets value-added service.