What is dollar-cost averaging?

In the bitcoin space, there is a need to make investments count and bring the optimal yield. This is where a concept like dollar-cost averaging comes to play.

Dollar-cost averaging is a way by which you can buy small portions of bitcoin at regular intervals over a long period.

In this method of investment, you can use a DCA calculator and pick an investment plan on the amount you would buy over a period of time.

The fundamental notion of DCA is to change how our body is wired to buy impulsively, which can be quite detrimental to our wallet. The bitcoin financial market just like any other has experienced its fair share of volatility, that’s why at some points playing the long game is the best plan. ‌‌‌‌The Dollar-cost average to some it’s like a “tortoise”  investment plan which is slow and steady, but the actual benefits can not be undermined. It reduces our inherent crave to get rich right away and cash out fast, rather it makes you take a more measured approach. Instead, infusing and buying small, reasonable portions over the long term tend to smooth out the bumps. And in many cases, it puts the slow investors way ahead of the sporadic buying counterparts.

For example, suppose that as part of a DCA plan you invest $1,000 each month for four months. If the prices at each month’s end were $45, $35, $35, $40, your average cost would be $38.75. If you had invested the whole amount at the start of the investment, your cost would have been $45 per share. In a DCA plan, you can avoid that timing risk and enjoy the low-cost benefits of this strategy by spreading out your investment cost.

In conclusion, there are Bitcoin applications like Bitnob that leverage on this to make your investments worth it and give you an eagle view in playing longterm.

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