The best time to start investing in cryptocurrencies is not during a bull market when Bitcoin reaches new all-time highs. The best time to invest in Bitcoin and altcoins is during a bear market which means the best time to start building up a crypto portfolio is right now.
I recommend using the dollar-cost averaging strategy when you plan to invest in crypto. Here is why this strategy is beneficial and how you can set up recurring buys to build up your crypto portfolio over time.
What Is the Dollar-Cost Average Strategy?
The dollar-cost average (DCA) strategy is also known as the constant dollar plan. It is an investment strategy in which an investor divides up the total investment amount across smaller purchases of a target asset over time.
Benefits of the Dollar-Cost Averaging Strategy
in an effort to reduce the impact of volatility on the overall purchase. That's why this strategy is especially used for assets that have high volatility like cryptocurrencies. By using a DCA strategy, you will generally lower your cost basis of the total investment over time. On one hand, the lower cost basis will lead to less of a loss on your investment when it declines in price. On the other hand, the lower cost basis will generate greater gains on your investments when its price increases.
The DCA strategy also removes the psychological pressure of trying to time the market. This is another big advantage of implementing a DCA strategy. By setting up a plan for constant investments, you avoid making investment decisions out of greed or fear like falling for FOMO or panic selling.
How to DCA on Binance?
Binance is one of the most popular cryptocurrency exchanges and I guess that most of you are already trading on Binance.
Let me show you how you can take advantage of DCA on Binance.
In the past, I already wrote about "Taking Advantage of the Dollar-Cost Averaging Strategy with Binance Auto-Invest".
This is one method on Binance that can save you the extra work of buying crypto manually over time.
Another method of setting automatic cryptocurrency purchases is the Recurring Buy feature on Binance. This is another cool feature on Binance that incorporates the DCA strategy. Let me show you how you can set up a Recurring Buy on Binance in five simple steps. It won't take more than five minutes. You can also find a detailed guide on "How to Use Recurring Buy" in the Binance FAQ section.
Step 1: Choose Your Crypto & Enable Recurring Buy
Log in to your Binance account and tap on "Buy Crypto" and then tap on the "Credit/Debit Card" option on the app homepage.
On the next page, choose the cryptocurrency that you would like to buy and enable the Recurring Buy option. Right now, Recurring Buy supports more than fifty different cryptocurrencies to choose from including the most popular ones like Bitcoin and Ethereum.
Step 2: Choose your fiat currency
After you have chosen the cryptocurrency to buy, you also need to choose your preferred local currency from more than 40 different fiat currencies.
Step 3: Set up the interval
On the same page, you also have to choose the buying interval. You can set up a weekly, bi-weekly, or monthly interval. You also have the possibility to select the exact day and time for your Recurring Buy.
Step 4: Select your payment method
Binance currently accepts payments via Visa or Mastercard. When you select your payment method, you can choose to use one of your existing debit cards or add a new one.
Step 5: Confirm your order
Finally, check and confirm your order details. This has to happen within one minute because the price, as well as the amount of crypto, will be recalculated after one minute. You can tap the "Refresh" button to see the latest market price.
After you have checked and confirmed your order, you can lean back and watch your crypto portfolio grow over time.
My Final Words
I believe that taking advantage of the dollar-cost averaging strategy by setting up a Recurring Buy is not only easy but also smart. The use of the Recurring Buy feature on Binance can add up to your portfolio having bigger gains over time.
When is the best time to start? Well, probably yesterday but it is not too late as you can still start by setting up a Recurring Buy today.
If you don't have a Binance account yet, please consider using my invitation link with the invitation code E3PGAJCE for signing up. This will save you trading fees each time you perform a trade on Binance. If you don't use it, you won't get any trading fee rebates. it is a classical win-win situation as you are also supporting me when you use my invitation link without any additional cost.
Finally, I also like to remind you that my intention in this post is to raise your awareness of the dollar-cost average strategy. My intention is not to replace your own research. I may look smart on my profile pic but I am not your financial sensei.
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