L’Expresso du Coin: DCA, Bitcoin and the big secret of crypto investing?
Read it out of the corner of your eye! – L’Expresso du Coin, a series dedicated to those in a hurry. A quick read for beginners and experts alike to get you in the mood for coffee. little stories, crypto dictionary and news to educate themselves while having a good time. Today we are fighting DCA.
History around the corner
Alastor Prudent has always been a meticulous man. He always reads the email twice before sending it. He categorizes all his invoices honestly and always consults the product instructions before using. Alastor is also a visionary. He intends to prepare a pension in the sun for his old age. Far from kidding himself, he doesn’t count on state aid and his retirement savings.
These are all topics that he often discusses with his best friend Gaspard Yeure over regular coffee at Krypto Bistrot. And that day, Gaspard is in a bad mood.
— I’m putting all my savings in Bitcoin in November 2021, Gaspard complains. Case in point, today I find myself with a 30% bet. I who dreamed of buying myself a Tesla. Frankly, I will not be caught again.
— I warned you, my dear Gaspard. But Monsieur always thinks he is smarter than everyone else. You should have done the same as me. Invest €50 in Bitcoin at the end of each month, neither more nor less. I don’t deal with the charts, I know that over time the price of Bitcoin will go up, until proven otherwise.
– Yeah? Gaspard is surprised.
— Yes, you do know that bitcoin was worth less than a dollar in its early days, right? So I bought like you in November 2021 when BTC was $69,000. But I still buy today when it’s around 20,000. Just enough to average my entry price down and when it’s ready the course will continue its crazy flight.
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In one corner of the head – DCA
the DCA or Dollar Cost Averaging a investment method is often advised when it comes to buying stocks or cryptocurrencies. Many inexperienced investors get into cryptocurrencies and decide to invest all their savings at once without preamble. However, this method often leads to failure. Because if the price starts to fall after that, it’s hard not to panic.
That’s the idea behind DCA. For example, provide the initial amount for the investment 500 €. Then buy regularlymean monthly, with a a small fraction of that amount. Typically €50. If the price starts to rise, you’re happy you invested. Of course, you will earn less than if you put 500 euros at once. Nevertheless, you still made a profit. And conversely, if the price goes down, you’ll be happy that you have enough money to buy the next month at a lower price. This process allows smooth all year round its average entry price per asset. And above all, it allows you to protect your nerves and Avoid FOMOas we explained to you in last week’s Expresso du Coin.
Stay in the corner!
In order to start DCA in any asset, one important thing is needed: beliefs. No need to start without it. First of all, we should try to understand values hidden behind this mysterious bitcoin. Of course, it takes time ask about of educate. To understand why so many people are interested in this popular digital gold. It can’t just be speculation, there has to be a deeper reason, right? Tell people about Bitcoin. A not-so-crazy idea that’s starting to gain ground even in American schools.
There are many ways to start investing. And when you’re just starting out, it’s hard to avoid mistakes. Indeed, understanding the psychology of markets is particularly complex. This is one of the recommended methods progressive investmentDCA to build a small nest egg at your own pace this alternative currency is called Bitcoin.
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