Cryptocurrencies are volatile by nature, and it’s easy to look at the market as a series of short-term gambles. However, a long-term investment strategy has been proven to work: Dollar-Cost Averaging (DCA).
Essentially, Dollar-Cost Averaging is a commitment to purchase a fixed dollar amount of a certain cryptocurrency at fixed, regular intervals. Ignore the price, stick to the plan, and keep buying more of the same token on set dates.
Many investors using the DCA strategy will automate their investments to avoid any emotion from getting in the way. One way to automate investments is to buy a specific coin every 2 weeks with 1% of your biweekly paycheck.
DCA is especially effective for new investors who want simple, long-term gains. They don’t want to watch the market like a day trader, buying and selling dips and peaks. Essentially, it’s protection against the market’s natural volatility.
How Dollar Cost Averaging Works
Instead of buying $1000 of Bitcoin in a
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