How to dollar cost average into crypto
Next time somebody asks you “when should I buy Bitcoin/Ethereum/Cardano/etc.?” send them this.
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You have likely heard the dogma about buying the dip or reading charts to find the correct entry point or blah blah blah.
The way I see it there is only one respectable way to buy crypto:
Go to your local bank (don’t worry, this is the last time you will ever need to do this)
Ask the banker for a second mortgage, or even better take out a loan against your home equity. If you don’t own a home, liquidating your 401k or child’s college fund will also suffice.
Ape every dollar you have into crypto during peak hype.
I kid.
A more respectable way to buy crypto is to dollar cost average, or as the pros call it, DCA.
The process is pretty simple. Let’s say you want to buy 10k worth of a certain cryptocurrency. You could just ape it all in at once, but what if you already did that in May of this year? Even after the most recent mini rally you would still have a lot of ground to make up.
What you should do is divide that 10k into smaller daily or weekly pieces and consistently invest that amount for your desired timeframe.
Does this all sound too simple? Good.
So much of investing in general, especially in crypto, is highly emotion-based.
It’s either FOMO (fear of missing out) panic: “omg I have to buy now🚀” where you over-allocate and get the rug pulled out from under you as we saw in May and many times in the past.
Or FUD (fear, uncertainty, and doubt): I need to sell right now because I don’t know if it will ever come back *crypto is dead☠️*.
Here’s a tip for the FUDsters: if you don’t possess enough conviction to hold on to your assets for at least 3-5 years, save yourself some money and emotional torment and stick to stocks.
Even in equities, that mindset will still probably ruin you. Take a long-term approach.
The best part of DCAing is that it's mindless.
Although Coinbase gets some flack they have good technology in place around dollar-cost averaging.
On the Coinbase app, it’s super simple to schedule daily, weekly, or monthly purchases straight from your bank account.
Set it and forget it, my friend.
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