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The crypto market may be down from all-time highs, but dollar-cost averaging (DCA) is still the best way to build long-term profits.
DCA is “sincerity”
Since BTC first “collapsed” from its all-time high on April 19, the entire crypto market as a whole has yet to identify a clear trend. In the past time, the market has continuously had strong declines, typically falling to $30,000 on May 19 and falling below $29,000 on June 22.
After each strong decrease in price, BTC has a slight increase, but then “everywhere in”! The market has not yet shown a clear recovery signal. These market moves are said to test the patience and confidence of both young and old investors. Especially lately there has been a lot of talk about a very low bottom for Bitcoin (BTC).
While periods of low volume and spikes in price volatility can be perfect conditions for whale-sized traders to enter, the average investor doesn’t stand a chance, especially with The multi-million dollar fund is now in action.
A lot of data shows that instead of doing intraday trades and trying to time the bottom of the market, retail investors can adopt a different method to find long-term profits. That tactic is DCA (Dollar-Cost Averaging) – ie “average price”.
Take a look at the above data from Coin Metric for 2020, you can see that if you start to “average BTC price” steadily since the peak in December 2017 you are still profitable 3 years later.
While this data is older than it is today, we can still see that in the long term, fixed investments spread out over time will significantly increase returns.
At this point, the BTC price is down nearly 48% from its all-time high – $64,854. Besides, the cryptocurrency market continues to show mixed bullish/bearish signals. This may be the right time for you to implement DCA tactics.
Don’t just wait to “catch the bottom”
According to data from CoinMarketCap, the Bitcoin price hit its first all-time high of $19,497 on December 15, 2017. So we will try to implement the “average price” strategy from this peak!
According to the DCA estimator from CostAVG.com, if you invest 1 USD/day to buy BTC, starting from December 15, 2017, by the end of June 30, 2021, the total investment of $1,850 will increase. increased to $7,519, equivalent to a profit value of 306%.
And if you ask most of the world’s top fund managers or traders, they all agree that a 306% increase in portfolio value in 4 years is an extremely spectacular rate of return. .
Ether (ETH) Offers Outstanding Profits
The price of Ether (ETH) has grown strongly from late 2020 to early 2021 as the decentralized finance (DeFi) market gets more and more attention, along with the NFT market boom. The above factors have increased exponentially in the use of Ethereum smart contracts as well as driving demand for ETH.
The significant increase in demand triggered a breakout of ETH reaching a price of $4,372 on May 12, 2021. Since then, the ETH price has dropped by almost 50% and is currently trading around $2,150 (at press time).
Going back in time to the period 2017 – 2018, ETH reached its first ATH level of $1,396 on January 12, 2018. From that peak, if using the DCA strategy with a capital of 1 USD/day, the equivalent investment of 1,810 USD will become 15,507 USD (calculated at the current ETH price). Then this investment still achieves a return value of up to 757%.
With ETH’s growth percentage more than double that of BTC, it has helped many investors put more faith in the second largest cryptocurrency by market capitalization. Therefore, besides Bitcoin, Ether has been chosen to become a long-term investment channel in the past few years as well as in the future.
DCA strategy also works for small cap altcoins
The “average price” strategy not only applies to large-cap cryptocurrencies, but also works well with small-cap altcoins. To demonstrate this, let’s CHK analyze the Theta Network (THETA), one of the “shining stars” of 2021.
Since the beginning of December 2020, the price of THETA has started to grow in a parabolic pattern, with an increase from about $0.8 to $2.4 on January 1, 2021. After that, the cryptocurrency continued to break out to $14.28 – an all-time high on April 15.
According to Blockchaincenter.net, the DCA data source for many cryptocurrencies with a certain investment of 10 USD/day, if an investor started buying THETA from January 1, 2018 then until now. , their $12,800 investment will now be worth more than $640,000, an increase of 5,000%. At the time of writing, the THETA price is currently 6.1 USD.
Not all altcoins have performed as well as THETA over the same period. However, this is still an example to prove that there is always a small reward for persistent investors.
The benefit of price averaging is that it helps to remove emotion from the investment process. While spending hours looking at screens leads to more losses than gains, the DCA strategy will allow you to spend more time on other issues around your life.
No trading strategy is perfect and not every cryptocurrency will yield significant profits. Some projects don’t even survive the next bull market.
However, it is still undeniable that “average price” is an investment method that has brought positive results for many professional investors as well as large financial funds.
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