Please note that our discussion here is an introduction and merely educational. I do not provide investment advice, and this write up should not be viewed as investment advice. In order words, don’t spend what you cannot afford to lose. Also, when in doubt, please consult a licensed financial expert.
Let’s begin! Cryptocurrencies like bitcoin have witnessed price volatility in the past with value leaping double digit percent in an hour. Whenever the price movement starts, there is no shortage of FOMO around whether or not it’s the right time to buy. Just like any other investment, this can cause a lot of anxiety and cast doubts on whether or not to invest. In this post, we shall be looking at what we called DCA and recurring buying through coinbase
ENTER DOLLAR COST AVERAGE (DCA)
DCA is an investment expertise which aims to reduce the impact of market volatility by investing a certain amount on a regular schedule. Take for example, purchasing $50 of Ethereum or bitcoin every week or month. This might not be unique to crypto traditional investors who have being using DCA for years to know the state of market volatility.
When the market is not doing well or down, that $50 investment will purchase more ethereum or bitcoin, which will increase the potential for a good gain or profit if the market turns around. When the market is up, that same $50 dollar will purchase less ethereum or bitcoin which will reduce the risk of loss if the market declines.
DCA can also be an effective method to own crypto without the fear of committing huge amounts of money at a fixed rate in a defined moment in time.
Also, doing this helps in adding the benefit of adjusting the amount up or down as you go. However, if you want to consider using DCA, consider if DCA is right for you and your own investment plans. Again, please consult a licensed investment advisor if you’re unsure.
RECURRING BUY
On Coinbase, it’s very easy to utilize DCA with an automatic recurring buy. All you need to 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.
Case study: Litecoin, October 2018—May 2019
In these seven months, Litecoin witnessed volatility in prices which was fluctuating between $22.9 and $114.8 per coin
“By May 15, 2019, you would have bought $1,600 worth of Litecoin. If you sold all your Litecoin at this point, you would get $3,208.02, making a profit of $1,608.02. Alternatively, if you bought the same amount of Litecoin ($1,600) on a single day, October 15, 2018, and sold all of it on May 15, 2019, you would get $2,721.17 which is a $486.85 less profit”.
Market timing is impossible to achieve, and crypto markets can be volatile. However, with DCA, you can be able to turn that market volatility into an opportunity.
Coinbase makes it easy to get started by setting up a recurring buy. Check it out now at https://www.coinbase.com/join/ojuade_q8