Bitcoin’s price volatility has long posed difficult questions for potential buyers: when is the best time to jump in? Am I too late? Bitcoin’s price can make large directional moves in short periods of time – so, when is best?
Dollar cost averaging, or “DCA,” is a lower-risk way to spread out your investment into equal amounts over a period of time, rather than trying to time the market in search of the optimal entry point. If you have $2000 saved and want to start acquiring bitcoin, you can spread it out into, for example, $100/week for 20 weeks.
You may end up buying bitcoin at a higher price than the initial buy, but, on the flip side, you may end up acquiring bitcoin at a lower price than the initial buy, and reducing your overall cost basis. In both scenarios, you’re still acquiring bitcoin! Dollar cost averaging allows you to do so in a way that reduces some of your exposure to price volatility, and, more simply, takes a lot of the stress out of trying to time “the perfect buy.”
dcaBTC (https://dcabtc.com/) is a free online tool you can use to see how a DCA strategy would have performed historically.
In this example, purchasing $10 in bitcoin per week for 3 years, starting 3 years ago, would have turned $1,570 into $4,060 today, an impressive 158% return. The same $10/week over a 5 year span would have turned $2,610 into $11,573, more than quadrupling the USD value of the original investment. There is no guarantee that future performance will equate to the past, and – let’s face it – we don’t have a crystal ball. Political conflicts, record inflation, and energy shortages have caused considerable stress to markets around the world in 2022.
With that in mind, if your conviction is strong in the future of true decentralized money, and you’re aware of how bitcoin’s price has historically rebounded from drawdowns, dollar cost averaging is an excellent strategy for investing over the longer term in a responsible and methodical way.
Purchasing Bitcoin with LibertyX
LibertyX operates the largest network of local stores where you can go and purchase bitcoin in-person. Our platform allows consumers to pay with cash or debit card to buy bitcoin from a cashier, ATM, or kiosk.
To get started, download the LibertyX mobile app from libertyx.com/app or from the Apple or Android app stores. Create a free account by entering your mobile phone number. You can increase your daily purchasing limit by providing additional information. Once you have the app, there are three simple steps to buying bitcoin:
(1) find a store
(2) create an order
(3) complete your payment.