đšDCA (DOLLAR COST AVERAGING): A FREAKING STRATEGY FOR BITCOIN AND CRYPTOCURRENCIES?
â DCA, a simple and effective strategy? â The price of Bitcoin shows an impressive rise in 2023, it clearly outperforms other financial assets such as gold, the NASDAQ or the S&P 500. After a catastrophic year 2022, cryptocurrencies woke up in 2023.
â However, some operators have not managed to really benefit from this increase. What strategy should you adopt as a beginner? While some will use technical analysis, fundamental analysis or even on-chain analysis, others will choose DCA (Dollar Cost Averaging). Many analysts promote this strategy for beginners (and not-so-beginners). Since August 2020, the company MicroStrategy led by Michael Saylor has implemented a DCA strategy. MicroStrategy is playing a dangerous game, but will Michael Saylor's bet pay off? In this article, we will return to this strategy that is accessible to everyone, and which has proven itself. However, planned investment can also carry risks.
đšDOING DCA ON BITCOIN AND CRYPTOCURRENCIES: WHAT DOES IT MEAN?
â DEFINITION AND VARIANTS OF DOLLAR COST AVERGING
â DCA or Dollar Cost Averaging is the act of purchasing an asset on a regular basis, regardless of the price of that asset and with a fixed amount. Let's take a concrete example:
â Every month, Paul has 50 euros to invest in Bitcoin. Once a month, on a date established in advance (to avoid being disrupted by the evolution of the Bitcoin price), he will invest his 50 euros.
â You will have understood, whether the price of Bitcoin is in a bullish market, or in a bearish market, Paul will invest in Bitcoin. By deciding to spread out your purchases, you take advantage of the decline to accumulate more significantly, and you also agree to buy fewer assets when the price increases.
