With Bitcoin hovering around $93k, there’s no shortage of talk about its ever-increasing value. So what if you jumped in in 2017 and DCA-ed (consistently investing a predetermined amount into a particular asset, regardless of its current market price) $25 every week?
Let’s break it down. If you invested $25 a week in DCA starting in 2017, you would now have an investment of about $10,450. So your investment would be worth about $16,946.00 in gold or about $15,358.23 in stocks.
For Bitcoin, however, that number would be $133,689.39! That’s 8x higher than the return on stocks and 7x higher than gold. While this is a “what if” scenario, it shows Bitcoin’s strong growth over the years and the potential for dollar-cost averaging.
What Does DCA Do?
The main use of DCA is to reduce market volatility because investing a fixed amount at regular intervals helps to reduce the impact of market fluctuations.
It is also beginner-friendly as it simplifies investing, making it accessible to those without much knowledge or experience in the market. Furthermore, DCA eliminates the need to constantly monitor the market and obsess over whether the market is doing well or not.
As such, it has become a popular strategy, with last year's survey finding that as many as 59% of crypto investors prioritize dollar-cost averaging as their primary investment strategy.
However, be aware that DCA does not offer any kind of guarantee and you may miss out on higher returns if the market continues to rise during your investment period. Therefore, it is not for everyone.
That said, if you decide to experiment with DCA in cryptocurrency, start by choosing the cryptocurrency you want to invest in. Next, set your investment budget and contribution frequency. Also, be sure to conduct a thorough assessment of your financial situation, as well as any necessary research.
DYOR! #Write2Earn #Write&Earn $BTC
