investors to develop a strategy that will not result in a one-time loss. Dollar Cost Averaging (DCA) is the strategy that has consistently produced positive long-term results in both the crypto and stock markets.
DCA works on the principle of investing a predetermined amount on a regular basis (eg daily, weekly, weekly or monthly) in a selected asset by adjusting the price of the average purchase of the asset to reduce the impact of price volatility .
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The investor divides his funds into small sums which are distributed at fixed times instead of making a single large purchase.
This means that if an investor wants to invest $30,000 in Bitcoin, for example, and he invests all of a sudden, if the price drops by 20% the next day, he will have already suffered a net loss of 20%.
But if he buys $1000 worth of Bitcoins every month, regardless of price, for a period of 30 months, his losses will be mitigated. And better, it is very likely to benefit from an increase in Bitcoin over a period of 30 months or 2 and a half years.
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— Crypto_chomeur (@crypto_chomeur) 29 August 2022
DCA is an ongoing process that runs for a fixed period and therefore requires time and commitment. Investors can overcome this problem by automating the DCA process by depositing the amount they want to invest on a platform that offers periodic fixed-amount purchases. The platform buys the asset on their behalf at the predetermined price and intervals.
also read Investing in Dogecoin crypto: should you buy DOGE before $0.2?
How to apply the DCA method to recurring purchases of cryptocurrencies?