Altcoin Roundup: Smart investors don’t just buy dips, they dollar-cost average
The crypto market may be lower than its historical peak, but the average dollar cost remains the greatest approach to make long-term benefits.
Since Bitcoin (BTC) dropped off on April 19th, Choppy markets have established the crypto sector, and undeccided markets such as this may prove the patience and strength of all the most committed traders and analysts, in particular when lower bottom calls are realized.
While low trading volume and price movement times can be the perfect conditions for whale traders to participate, the typical investor has no chance, especially today with the money in the millions of dollars.
Data reveals that the Dollar Cost Averaging (DCA) is the greatest way for individual investors to create long-term gains on both traditional as well as crypto markets, rather than trading and trying to make a difference.
In 2020, Coin Metrics indicated that three years later investors who averaged dollar costs for the BTC from the high in December 2017 had profits.
Tweeted Coin Metrics:
"Although #Bitcoin is currently trading 30% below ATHs, average dollar cost from market top in Dec 2017 would have been 61.8% (or 20.1%) a year. The dollar cost average of Jan 2018 would have returned 87.6%, or 27.9% per year, as it was for #Ethereum, which nevertheless fell by 71% from its high."
Although the graph is a bit antiquated today, one sees that a long-term growth in portfolio value has led to constant investments over time.
With BTC's current $64,863 all-time high over 47% and the crypto-monetary market continues to give conflicting signals, this might be an appropriate opportunity to implement the DCA approach.
More than only "buying the drop" is needed for investment.
Consider the findings of the average dollar costs in different cryptocurrencies between 2017 and 2018 and the end of June 2021.
The beginning of each analysis will be on the day of the all-time high value of the token's bull market in 2017-2018 and from then on the $10 investment will apply weekly.
Bitcoin peaked during the cycle on Dec. 15, 2017 when BTC traded for $19,497, according on CoinMarketCap statistics.
By using CostAVG.com's estimating tool DCA, you see that the total investment of $1,850 would have resulted in a 306 percent rise in value of 7,519 dollars if BTC had invested daily from December 15, 2017 until June 30, 2021.
To inquire about the thoughts of the majority of fund managers or traders who live in the traditional investing world is a fantastic rate for a 306% growth in their portfolio worth over a four-year term.
An outsized return comes back from Ether
Ether prices skyrocketed from late 2020 to early 2021 as a result of an exponential expansion in the usage of the Ethereum Smart Contract network and increasing demand for ETH in the decentralized (DeFi) and non-fongible tokens (NFT).
Higher demand led to a surge that on 12 May 2021 put Ether's price down to $4.363, but since then it dropped by about 50% on trading below $2,200.
The price of ETH achieved an all-time high of $1.396 on 12 January 2018 during the bull market of 2017. Investors using the DCA approach would have paid a total of $1,810 and produced a portfolio worth of $15,50 7 at the current price of Ether to spend $10 each month from its peak. This is a 757 percent gain.
Ether's percentage gains are more than double those of Bitcoin, making many who suggested that Ether was a better investment in the last couple of years a certain credibility.
The DCA approach also benefits smaller-cap cryptocurrencies
Let me quickly analyze the Theta, which was one of the breaking stars in 2021, to illustrate the advantage of implementing the DCA method for lower size altcoins.
In December 2020, THETA started a parabolic price increase, from around $0.80 to $2.40 by January 1, 2021. On April 15, the amount rose to an ever-high level of $14.28.
Blockchaincenter.net, offering dollars-cost data for various token investments of $10 a day and now a cumulative investment of $12,480 worth more than $638,000 – a 5,000 percent rise – would be a fixed investment of $10,000 a day if the investor had began investing in THETA on January 1, 2018.
It is apparent that not all cryptocurrencies and THETA performed over this period, but this is an excellent illustration of how consistent investment in a smaller-scale investment may benefit patient investors.
The advantage of a dollar cost average is that it eliminates emotion from the investment process and allows investors to concentrate on something else, whereas day traders spend hours behind screens and often lose more than earnings.
This also eliminates the need to explore market levels and bases and allows investors to obtain a constant measured exposure to a variety of assets.
Not every cryptographic project will earn large returns or even survive until the next bull market cycle, but dollar cost averaging is a method that has delivered consistent results both for amateur and professional investors
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