How to know the best time to invest in crypto for profit
In an ideal world, it's simple: buy low, sell high. But in reality, it's easier said than done, even for professionals. Cryptocurrency like Bitcoin can experience daily or hourly price volatility, which can however leads to uncertainty or fear of missing out, or even fear of participating at all. So, when crypto prices are fluctuating, how do you know when to buy?
Many investors uses a strategy called "Dollar-Cost Averaging" ( or DCA) to reduce the effect of market volatility by investing a smaller amount into an asset. Some also use "Time the Market" strategy to invest in asset like crypto, stocks or gold on a regular schedule.
However, DCA seems to be or might be the right strategy to use when you believe your investment will appreciate ( or increase in value) in the long term and will be affected by price volatility on the way.
What is DCA?
Dollar-Cost Averaging or DCA is a long-term strategy use by crypto investors to regularly but small amount of crypto assets over a period of time, no matter the market price at that moment. For Instance, an investor who invested $100 in Bitcoin every month for a year, instead of $1,200 at once is practicing DCA strategy.
DCA strategy does not only work for cryptocurrency investment, it also works for assets like Gold, stocks etc. DCA can help an investor safely enter a market, start benefiting from long-term price appreciation, and average out the risk of downward price movements in the short-term.
How does DCA works?
Of course, the success of any DCA strategy is still subject to what’s happening in the crypto-market. To demonstrate, let’s dive into an example using real-world prices, right as they approached Bitcoin’s biggest downturn from 2017 to 2021. Investor who invested $100 in bitcoin every week starting on December 18, 2017 (near that year’s price peak), He would have invested a total of $16,300. But on January 25, 2021, His portfolio would be worth approximately $65,000 — a return on investment of more than 299%.
Learn more about DCA here and learn how to setup a crypto wallet to start Investing today! Like this article and give me a clap as you wish. Thanks for reading. Cheers!
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