● Beginner Crypto Basics

What Is Dollar Cost Averaging? Crypto Investing Strategies Explained.

5 minutes 2 years ago

What Is Dollar Cost Averaging?

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. In this article we will discuss what Dollar Cost Averaging is, using Bitcoin as an example.

How to dollar cost average Bitcoin

Dollar cost averaging or DCA 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. Essentially, DCA involves an individual setting aside an amount to be invested - say $1000. This is then divided up to make periodic Bitcoin purchases, say once a week, over the course of a month. These purchases are made at set intervals, regardless of the market price. 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 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, potentially lower price. By buying small amounts on a regular basis, it may minimise risk and allow for more consistent growth, in the long term.

A potential strategy for investing in crypto

Investing in any industry carries risk, however dollar cost averaging can contribute towards a balanced investment strategy.. If you are interested in dollar cost averaging, remember to decide on a budget, choose a regular interval you’re comfortable with, sign up with CoinSpot 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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