"Should I buy Bitcoin now or wait for it to go down a bit?"
I get this question multiple times a day. And rather than try to explain the current state of the market, risk-adjusted returns, market bubbles, altcoins, trends, bull markets, bear markets, fundamental analysis, and so on - I now just point them to a dollar-cost-averaging strategy using Deltabadger.
What is Deltabadger?
Deltabadger is a service that allows you to automatically dollar-cost-average into Bitcoin and other cryptocurrencies every hour, vastly reducing your risk and putting your cryptocurrency investment strategy on autopilot.
If you plan to invest in Bitcoin you need to hear this:
The ugly truth is that predicting short-term price movements of any asset, let alone one as volatile as Bitcoin, with consistency is so difficult it's nearly impossible. The most successful day traders and swing traders in the world only get it right about 55% of the time after dedicating their lives to the discipline.
Now, if we zoom out and extend our investment time horizon predicting macro-level price movements becomes much, much easier. In short, myself and a lot of other people think the price of Bitcoin will continue to rise over the next decade. If you're still not confident that Bitcoin will continue to rise in value, then you can learn more by reading my Bitcoin analysis here.
"Should I buy Bitcoin now or wait for it to go down a bit?"
The answer is to buy now. But not with a lump sum or with a short term investment horizon - that's too risky. Instead, we can drastically reduce our risk and increase our expected returns by using a dollar-cost averaging strategy over a long period of time.
A dollar-cost averaging strategy is simply investing a small amount of money at a recurring interval. For example, if you purchased $100 worth of Bitcoin every week you'd be following a dollar-cost-averaging strategy.
Over time, dollar-cost averaging smooths the price at which you've invested into Bitcoin which mitigates any risk of purchasing the asset at the wrong time.
For example:
If you started buying $100 worth of Bitcoin each week in December of 2017 for 3 years, you'd have invested a total of $15,700 which would be worth $57,372 as of December 2020.
If instead, you invested that lump sum of $15,700 into Bitcoin in December of 2017, it would be worth roughly ~$23,000 3 years later as of December 2020.
In the scenario where you dollar cost averaged, you experienced lower risk, higher returns, and you also enjoyed the luxury of holding onto your investment capital for a longer period of time instead of having to fork over the whole lump sum upfront.
To be fair and transparent, this is a cherry-picked example where the returns from dollar-cost averaging would be higher than the returns from a lump sum investment. Depending on when you make a lump sum investment, the opposite can be true, but the lump sum route carries much more risk because you only get one chance to time it right.
Here's a great website that has a tool you can play around with that will help you understand the power of dollar-cost averaging into Bitcoin over time: DCABitcoin
"Okay, I'll dollar cost average then. But how frequently should my purchases be? And where do I buy Bitcoin? I have to remember to keep buying Bitcoin every so often?"
These are all-natural questions to have, and questions I get quite often after explaining a dollar-cost-averaging strategy. First, the more frequently your purchases are, the lower your risk will be.
For example, if you buy Bitcoin on the first day of every month, you still run the risk of it dropping in value at some point later in the month in which case you could have gotten a better price. By buying daily, or hourly with Deltabadger, your risk of buying Bitcoin at the wrong time disappears.
Deltabadger allows you to automatically purchase Bitcoin at the hourly interval as opposed to the weekly or daily recurring intervals offered by most exchanges, which greatly reduces risk and allows you to completely automate your investment strategy.
As far as where to purchase Bitcoin from, Deltabadger currently supports Kraken, Binance, and Bitbay, all of which have low exchange fees.
(Note that if you are based in the United States, Kraken will be your best bet as it is a US-based exchange and is compliant with US cryptocurrency regulations.)
Deltabadger will also support Gemini and Coinbase Pro in the near future.
"What about other cryptocurrencies besides Bitcoin?"
The free version of Deltabadger supports the automated buying of Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and Monero (XMR).
The premium version of Deltabadger supports the automated purchasing of any cryptocurrency that is available on whichever exchange you choose to connect Deltabadger to.
"What's the difference between the free and premium versions of Deltabadger?"
The free version allows you to purchase up to $500 of BTC, ETH, LTC, or XMR per year at hourly intervals, which is a great starting point if that's all you planned to invest per year in the first place.
The premium version of Deltabadger supports unlimited purchases of any cryptocurrency at hourly intervals. The premium version costs $50 for 1 year, or $150 for 4 years.
While $3.12 per month is already a reasonable price, Jan Klosowski, the owner and creator of Deltabadger, has implemented a referral discount program that allows you to save an additional 25%, bringing the cost down to $37.49 for the one year plan and $112.49 for the 4 year plan.
So for what works out to $2.34 per month, you can drastically reduce your risk and completely automate your cryptocurrency investing strategy. If your hesitant about this cost, compare it to your other options:
Setting up recurring Bitcoin purchases through Cash App:
- You'll only have access to Bitcoin and no other cryptocurrencies.
- You'll pay spread fees at times of roughly 1.5% or higher, which can cost you ~$15 for every $1000 you invest.
- You'll only have access to daily intervals, not hourly, meaning you may purchase Bitcoin at it's most expensive point throughout the day.
Setting up recurring purchases through Gemini:
- Gemini has low fees through their Active Trader platform, but they only allow automated recurring purchases through their default basic platform, which charges extremely high fees, especially for small purchases (as high as 10%).
- You'll only have access to daily purchases, not hourly.
Is Deltabadger difficult to set up?
Not at all. Once you sign up, you'll see that each exchange has an easy to follow a step-by-step guide.
I personally use Deltabadger and recommend it to everyone who asks me how to invest in the cryptocurrency market. You can read other people's reviews below or on the Deltabadger website.
