What Is Dollar Cost Averaging? Crypto Investing Strategies Explained.

5 minutes

What Is Dollar Cost Averaging? Crypto Investing Strategies Explained.

As a newcomer to the cryptosphere, it can all be pretty overwhelming and figuring out where to get started can be tough. There are many investment strategies, but one of the most popular is dollar cost averaging. Today, we'll talk you through how to do it with cryptocurrency, starting with Bitcoin. If you read this article and decide that cryptocurrency investing is for you, then register with us today and get started with CoinSpot here!

How to dollar cost average Bitcoin

Let's use Bitcoin as an example. Bitcoin dollar cost averaging is really just buying a specific amount of Bitcoin at a specific time. This is done in order to make the most out of fluctuations in the market price, and protect yourself against losses. Essentially, you set aside an amount to be invested - say $1000. You then divide this up and make periodic Bitcoin purchases, say once a week, over the course of a month. You make the purchases at set intervals, regardless of the market price and your emotional feelings towards it.

In fact, it could be that you're already using dollar cost averaging, you just don't realise it.

So, why dollar cost average?

Dollar cost averaging crypto is an extremely effective method to deal with market volatility. The aim of 'DCA' is that you avoid spending all of your money at once, only for the price to then fluctuate, leaving you without capital in order to purchase at the new, low price... By buying small amounts on a regular basis, it minimises your risk and allows for a more consistent means of growth, in the long term.

A potential strategy for investing in crypto

These days, people are more inclined to think outside of the box, financially speaking that is. It's this new way of thinking that makes cryptocurrency investment so appealing. Investing in any industry carries risk, and while there's no clear path to victory. Dollar cost averaging can at least contribute towards a balanced, sounder investment strategy. Just remember to set a budget and stick to it, in order to avoid any serious issues down the line. If you are interested in investing, sign up with CoinSpot here and get started today!

Disclaimer - The above information is for reference purposes only. It is not financial advice and should not be construed as such. Always do your own research when it comes to purchasing cryptocurrency.

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