Trading Class 101: Smart Investment Tactics Are Not Bottom Fishing
The crypto market may have fallen below its all-time highs, but dollar cost averaging (DCA) is still the best way to generate long-term profits.
DCA is “sincerity”
Since BTC “collapsed” from its all-time high for the first time on April 19, the entire crypto market as a whole has not yet had to recognize a clear trend. The market has been declining sharply recently, typically falling to $ 30,000 on May 19 and below $ 29,000 on June 22.
After every sharp price drop, BTC has a slight increase, but then “everywhere in”! The market has not yet shown a clear sign of recovery. These market moves are designed to test the patience and confidence of both young and old investors. There has been a lot of talk recently about a very low low for Bitcoin (BTC).
While periods of low volume and high price volatility can be perfect conditions for whale-sized traders to get in, the average investor has no chance, especially with The Multi-Million Dollar Fund is in action now.
Much data shows that retail investors can use a different method to generate long-term profits rather than intraday trades and trying to pinpoint the bottom of the market. This tactic is DCA (dollar cost average) – ie “average price”.
Take a look at Coin Metric’s 2020 data above. You can see that 3 years later, if you have continuously “Average BTC prices” since the December 2017 peak.
Although this data is older than it is today, we can still see that long-term distributed fixed asset investments will significantly increase returns.
At this point, BTC price is down nearly 48% from its all-time high of $ 64,854. Additionally, the cryptocurrency market continues to show mixed bullish / bearish signals. This could be the right time for you to implement DCA tactics.
Don’t just wait to “hit the floor”
According to data from CoinMarketCap, Bitcoin price hit its first all-time high of $ 19,497 on December 15, 2017. So we will try to implement the “average price” strategy from this summit!
According to CostAVG.com’s DCA Estimator, if you invest $ 1 per day in the purchase of BTC from December 15, 2017 through June 30, 2021, the total investment increases from $ 1,850 to $ 7,519, to a profit value of 306% .
And if you ask most of the world’s top fund managers or traders, they all agree that a 306% increase in portfolio value in 4 years is an extremely spectacular return.
Ether (ETH) offers outstanding profits
The price of Ether (ETH) has risen sharply from late 2020 to early 2021 as the decentralized finance (DeFi) market, along with the boom in the NFT market, is gaining increasing interest. The above factors have grown exponentially when using Ethereum smart contracts, driving demand for ETH.
The significant increase in demand triggered an outbreak by ETH, which reached a price of USD 4,372 on May 12, 2021. Since then, ETH price has fallen nearly 50% and is currently trading at around $ 2,150 (at press time).
Looking back from 2017 to 2018, ETH reached its first ATH level of USD 1,396 on January 12, 2018. From this maximum value, when using the DCA strategy with a capital of USD 1 / day, the corresponding investment of USD 1,810 becomes USD 15,507 (calculated at the current ETH price). Then this investment achieves a return value of up to 757%.
With ETH’s growth percentage being more than double that of BTC, this has helped many investors gain more confidence in the second largest cryptocurrency by market capitalization. Therefore, ether has been selected as a long-term investment channel alongside Bitcoin in recent years and in the future.
The DCA strategy also works for small-cap altcoins
The “average price” strategy not only applies to large-cap cryptocurrencies, but also works well with small-cap altcoins. To demonstrate this, we are working with CoinCu to analyze the Theta Network (THETA), one of the “shining stars” of 2021.
Since the beginning of December 2020, the price of THETA has started to rise parabolically, rising from around USD 0.8 to USD 2.4 on January 1, 2021. After that, the cryptocurrency broke further to $ 14.28 – an all-time high on December 15. April.
According to Blockchaincenter.net, the DCA data source for many cryptocurrencies with a specific investment of $ 10 / day, if an investor started buying THETA on January 1, 2018, their $ 12,800 investment will now be worth more than $ 640,000 be an increase of 5,000%. At the time of writing, the THETA price is currently $ 6.1.
Not all altcoins performed as well as THETA over the same period. However, this is still an example that there is always a small reward to be found for die-hard investors.
The advantage of price averaging is that it helps remove emotion from the investment process. While looking at screens for hours leads to more losses than gains, the DCA strategy allows you to devote more time to other problems in your life.
No trading strategy is perfect, and not every cryptocurrency will generate significant profits. Some projects won’t even survive the next bull market.
However, it is still undeniable that the “average price” is an investment practice that has produced positive results for both many professional investors and large financial funds.
You may be interested in: