Saturday, October 21, 2017

When Is The Best Time To Buy Bitcoin? Dollar-Cost Averaging Pays!

Many people ask "When is the best time to buy Bitcoin?" or "Will the price go down? I want to buy, but should I wait?"

Truth is, the fluctuations in Bitcoin, and cryptocurrency in general, is difficult to know. Unlike stocks, there's no board of directors that will provide frequent updates on the goings-on with the company. Unlike fiat, your ordinary currency, there's no country or government or economy to base the probabilities. If USD went up against the EUR, does that mean Bitcoin price will be affected? Maybe, but really it doesn't even care whether a WW3 is imminent.

 So, after that lengthy paragraph, the most trusty investment plan for Bitcoin is called Dollar Cost Averaging, or Cost Averaging if you're not using dollars.

With the rollercoaster highs and lows of bitcoin, Dollar-Cost Averaging Pays.

Dollar-cost averaging (DCA) is a wealth-building strategy that involves investing a fixed amount of money at regular intervals over a long period. This type of systematic investment program is familiar to many investors, as they practice it with their 401(k) and 403(b) retirement plans. Dollar-cost averaging is carried out simply by investing a fixed dollar amount into your cryptocurrency of choice at pre-determined intervals. The amount of money invested at each interval remains the same over time, but the number of "coins" purchased varies based on the market value of Bitcoin at the time of a purchase.

When the markets are up, you buy fewer coins per dollar invested due to the higher cost per coin. When the markets are down, the situation is reversed and you purchase a greater of number of coins per dollar invested. It's a strategic way to invest because you buy more when the cost is low, so you get an average cost per coins over time, meaning you don't have to invest the time and effort to monitor market movements and strategically time your investments. PS: With the popularity of this post, I will be preparing another one with examples to better illustrate the value of DCA.

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