Investing in cryptocurrencies (and not only in them) is often associated with complicated strategies and analyses. Is that really the case? In this text, we will present you with one of the simplest investment methods. Thanks to it, you will understand that investing in digital currencies is much easier than you thought.
Is investing (not) difficult?
In times of high global inflation, more and more people are becoming interested in the stock market. The reason is, of course, an attempt to preserve the value of their savings and generate additional profits. Unfortunately, most novice investors encounter their first problem right from the start – they don’t know how to start. What’s more, another problem arises: what investment strategy to choose. Despite appearances, things are not made easier by internet forums or experts who speak on social media or TV programs. They often bombard us with complicated concepts and analyses. So how do you start buying cryptocurrencies in such conditions? How not to get lost in the flood of advice? Maybe just choose the simplest possible strategy?
The simplest investment strategy
Before we explain to you what style of play on the stock market we mean, you need to know a certain specificity of almost every market – from precious metals, through stocks, to cryptocurrencies. Namely, most assets move on the chart in cycles – these consist (to simplify somewhat) of bear markets (price drops) and bull markets (price increases). A large part of success on the market therefore lies in catching these cycles and starting to buy assets at the right time (closer to the end of the bear market), and then selling during the bull market.
What is the easiest way to recognize a bear market? Practically by the mood of market participants. There is a reason why historically it is best to buy BTC when everyone predicts the “death of bitcoin”.
Buy periodically
Once we have “caught” the bottom of the bear market – or at least its vicinity – we can begin the process of entering a given market. How to do this? Should we invest all of the capital earmarked for investment at once? This is one method. However, we have another idea. It is about the Dollar-Cost Averaging (DCA) strategy.
As the name suggests, it simply involves buying a given asset “in installments”, thus averaging its purchase price.
Why is it better to use DCA, and not buy assets with all our funds at once? By averaging the price, we minimize the risk – it is simply safer. By investing “in installments”, we reduce all the risks related to bad timing, i.e. entering the market too soon (the price may, for example, drop by a solid few percent).
The effectiveness of this strategy on the BTC market can be analyzed yourself based on the exchange rate chart. For example, by investing $100 per week we could earn as much as 486% over the last 3 years. In total, we invested several thousand USD, but after a period of 36 months we would have about $100,000.
It is worth adding that the DCA strategy is not only used by novices, but also by famous investors such as Warren Buffet. This is probably the best recommendation that what we have described above works.
Automate your shopping
However, the DCA strategy will only be effective if we approach it systematically. If you can, for example, buy a portion of bitcoin every month for a set amount – great! But maybe it is worth considering making your life easier and automating this process with special tools?
The Polish company Ari10 comes to the rescue, introducing a special tool for DCA on the Bitcan.pl platform. Using it, everyone will be able to automate their cryptocurrency purchases by connecting their payment/credit card and buying digital currencies with it, for example, once a month. Using the tool is simple and intuitive. It relieves us of the need to remember to buy cryptocurrencies at specific intervals.
