Why do we need this investment strategy?
"Crypto is a hot asset class " I say this at the risk of being repetitive.
To invest in crypto one need to have sound knowledge of both fundamentals as well as technicals.
##You want to buy Bitcoin ?
I remember back in 2017 when bitcoin was hitting one high after another a lot of people (read retail investors ) got really curious and wanted to buy Bitcoins.
The issue that they faced was how to but an asset which is already at priced at $12000 and racing relentlessly towards $20000 (On hind sight).
Though no one knew how how far and hard Bitcoin would run before it corrected.
Getting too late to the party
For most people Bitcoin Ethereum any other crypto or asset class becomes attractive when stories about it repeated hit the News.
When crypto news hits main stream media it is already hot property.
So by the time most people the "BTC & Crypto are Hot" news and think of reacting to it the big investors and the whales have already taken positions to exit.
They know that at some point the prices would correct and they are already have an exit plan in place which would get triggered at some predefined level.
Getting ready to exit?
Yes do not be so surprised. It is OK to HODL bitcoins for life and see go on a hyperbolic journey of rise and falls however once you get the hang of the technical stuff you would like to benefit in more ways than one. Though we would talk about it in a subsequent post.
You can buy your crypto piece by piece
A lot of people believe that to get into crypto like Bitcoin or Ethereum you need to buy in whole numbers.
However it is a fallacy. The beauty of investing in crypto is you can buy it in fractions.
Having said that it may be noted that with a lot of cryptos including Bitcoin and Ethereum you have to pay a network fee whenever you move your crypto from one wallet address to another.
Retail investors coming late to the party is a result of FOMO
When you keep watching a crypto or an asset class go higher and higher you are inclined to pay heed to half baked news that claim bitcoin is going to $50,000 or to 1 million.
Well it sure can however it would not happen that you buy your Bitcoin today go to sleep and in the morning it would have gone up multiple times to be at $50000 or 1 million from todays levels.
For it to reach there it would follow several cycles of up and down price & volume movements and even if you are not too well versed with the technicals and fundamental knowledge you can learn and keep using the following strategy.
This strategy if used properly can help you protect from FOMO and even gain decent returns.
So What is the Dollar Cost averaging investing technique?
It is about buying into your preferred crypto periodically that too with a fixed amount of money.
For example if you want to invest in BTC and want to invest $100 every month you are more than welcome to do so.
The way the strategy works
As per this strategy every month on a fixed date for example on the first of every month you buy $100 worth of Bitcoins.
So over a period of one year you would have put in $1200 worth of your money into bitcoins.
In some months the price of bitcoin would be up and would would get less amount of bitcoin for your $100.
In some months the price of Bitcoin would be low and you would get more amount of Bitcoins.
Since it is difficult to time the market with perfection so this works as a good investment strategy and you buy fractions of bitcoin at not too low or not too high a price but an average price.
Over a period of time your stash of crypto can grow and give you a good appreciation in terms of value.
This is a pocket friendly approach and anyone can spare a predefined amount to invest into crypto.
Discipline and regularity are the secret of success
For this investment strategy to work for you it is of utmost importance that you are regularly investing and do not miss your investment date.
Disclaimer: This is not investment advice. Do your own due diligence and research before investing.
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