The cost averaging strategy may be the best way to invest in assets if you are not prepared to invest too much time in research
One of the most popular bitcoin investment strategies is Recurring purchases by fixed sums, which requires constant purchases of assets if their price gradually decreases over time. The strategy helps to hedge losses when or if an asset enters an uptrend.
The main advantage of DCA is the lack of expertise one needs to successfully achieve significant long-term profits. Despite the nearly 80% correction on BTC, investors who bought the asset in 2018 or even 2019 are still making a profit.
Thanks to the volatility of the first cryptocurrency, it is possible to cover almost 100% of your own losses after each correction cycle by buying at the local top. But to do this, an investor would need some knowledge about market structure and technical analysis. The simplest version of the strategy is to buy an asset on certain dates.
The results of the strategy
As mentioned, a popular way to get exposure to a certain asset is to buy it on a certain date. Small retail investors sometimes prefer to buy BTC every Monday of the year.
For example, the average price through 2016-2019 would be $1,494 for the average investor. If someone entered the market relatively late in 2020, their average entry would be $18,373, which would put investors in profit at the current price of BTC.
One of the most profitable yet realistic entry ranges would be 2017-2020, the cycle in which Bitcoin went through the first wave of adoption. The average entry price for an investor in the “ICO era” would remain at around $4,378.
As of press time, Bitcoin is changing hands at $19,792.