A recent survey by Kraken, one of the leading cryptocurrency exchanges, has found that the majority of crypto investors favor dollar-cost averaging (DCA) as their preferred investment strategy. Out of the 1,109 crypto investors surveyed, a striking 83.5% had used DCA at some point, with 59% continuing to rely on it as their primary method of buying cryptocurrencies.
Dollar-cost averaging involves regularly purchasing an asset, such as Bitcoin or Ethereum, at set intervals, regardless of market price. According to Kraken’s research, this approach helps investors mitigate the effects of short-term price volatility and removes emotional biases from trading decisions.
Volatility vs. Consistency
When it comes to the benefits of DCA, investor opinions vary depending on income. Around 46% of respondents cited the strategy’s ability to hedge against market volatility as its primary advantage. However, for lower-income investors earning under $50,000 annually, the biggest benefit was DCA’s promotion of consistent investment habits.
On the other hand, higher-income investors, particularly those earning between $175,000 and $199,000, overwhelmingly favored DCA for its potential to minimize the impact of market volatility. Interestingly, only 12% of all respondents felt that DCA’s primary advantage was its ability to remove emotions from trading decisions.
Despite its popularity, the Kraken survey also found that just 8% of investors stuck with DCA during periods of financial loss, with those employing other strategies demonstrating more resilience during market turbulence.
Kraken Points Factors like Income and Age
The Kraken survey further revealed that investors’ incomes and age groups significantly influenced their crypto investment strategies. Wealthier participants, particularly those earning over $100,000, showed greater confidence in sticking to their DCA plans during market fluctuations.
Nearly 63% of these high-income investors reported a “very strong” ability to adhere to their strategies despite market dips.
In contrast, younger investors between the ages of 18 and 29 were more inclined to adopt riskier approaches, such as attempting to time the market. Only about a third of this younger group kept close tabs on crypto prices as regularly as older investors aged over 45, who were twice as likely to monitor cryptocurrency markets compared to traditional investments.
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