How many ways are there to accumulate Bitcoin?
As we know, Bitcoin is an asset whose main feature is scarcity. For this reason, more and more people have an interest in accumulating them, but not everyone can afford to buy a whole one. Here is a ranking of strategies to accumulate certain quantities.
Dollar cost average strategy (Accumulation plan)
The simplest and most used strategy is the one that plans to stagger Bitcoin purchases over time, in order to mediate the carrying price. This strategy is also the one that lends itself best to those who want to accumulate Bitcoin but do not have the time or the expertise to set up a more advanced one. In a nutshell, the accumulation plan consists of the monthly or weekly purchase of a small amount of BTC. You can therefore expect to accumulate, for example, $100 every first day of the month. The intent is to expose yourself to an asset gradually, regardless of its volatility as the price at which you buy is mediated with staggered purchases.
Here's an example of an early 2020 savings plan, with monthly entries from $100:
As you can see, the average price indicated by the blue line is significantly lower than the real price of the asset.
This happens because recurring purchases take place at different prices and the result is a more or less stable average with respect to the fluctuations that the asset in question has instead.
This strategy can also be automated thanks to some useful tools offered by exchanges such as Binance: "Binance Auto-Invest". It is a tool that allows you to create a plan tailored to your needs to recurrently purchase different assets. Using this tool is very simple, you deposit a capital on Binance, go to the "Earn" section and then "Auto_Invest". At this point it is sufficient to simply decide the cadence of our accumulation plan and the amount of capital invested each time.
Pros: mediation of the admission price, recurring purchases, automaticity.
Cons: It is a time-consuming strategy, not suitable for those looking for fast exposures.
Targeted purchases
Targeted purchases are a way to accumulate Bitcoin when the price is at a particularly advantageous point according to the buyer. Basically, you buy the desired quantity on the market or set a limit-order on an exchange at a certain price. This, of course, contrasts with the previous strategy as it exposes us a lot to the volatility of the asset. But how can you define what are the best times to buy? Fortunately, there are technical indicators that are simple to use and that can provide valuable help. First of all I state that in order to effectively use an indicator on a chart you need to know how to use platforms such as Tradingview, on which you can view the Bitcoin chart and add the desired indicator. Moving on to practice, let's take as an example the 50 and 200 period moving averages (MA50 and MA200) on the daily timeframe, which are among the most used and known indicators. You can set up a simple accumulation strategy that provides for recurring buying only when the MA200 is above the MA50 (i.e. in the downtrend phases). This allows you to buy Bitcoin by default only when its value is falling. A second strategy involves buying only when the asset price falls below the MA50. Finally, changing the indicator, there are those who prefer to rely on price models like the one described here. It is a graphic that on a logarithmic scale defines the bands where it is more advantageous to accumulate.
The strategies are obviously modular and these are just examples, everyone can establish the purchase method that best suits his investment method.
Pros: You buy when the price is low.
Cons: Exposure to asset volatility.
Income on Bitcoin
Let's now pass to the methods that provide for the accumulation of Bitcoin through the income that derives from a certain capital. I state that to use them it is obviously necessary to already have a certain amount of BTC. The idea is to use all or part of the capital and lend it to other investors, receiving in exchange interest paid directly in Bitcoin. Fortunately, we don't have to look for investors alone, with all the risks we would take in doing so, but there are centralized and regulated services that do it for us. Here are some of them:
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Celsius Network: A CeFi company that deals with cryptocurrency loans and annuities. Once you have created an account on the Celsius website (to do so you can use this link which entitles you to the welcome bonus), simply deposit our Bitcoins to start accruing interest, which is 6.2%. The payment by the platform takes place weekly and directly in BTC. The withdrawal is also free and can be done at any time. To learn more, here is an interesting article: My CeFi experience #2: Celsius Network
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BlockFi: identical platform to Celsius Network in terms of annuities, with the only difference that interest is paid once a month rather than weekly. Subscription to BlockFi can be done from this link. Here too, to learn more, I leave you this article: My CeFi Experience: BlockFi
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Binance Earn: the Binance exchange offers interesting Bitcoin annuity solutions. It starts with "Flexible Savings" which offer up to 5%, up to 7% on "Locked Savings". You can sign up for Binance with this link, which gives you 10% off trading fees forever.
Pros: Fixed and stable annuities, without the need for advanced skills to use the platforms.
Cons: Exposure to risk related to centralized platforms.
Income on stablecoins
If 6% seems to you a little like an income on Bitcoin, know that it is possible to increase up to about 8% with some small foresight. There are, in fact, some CeFi services that offer the possibility of accruing an interest on stablecoins and requesting the payment of the latter in Bitcoin. I am referring to BlockFi, a platform that we saw a little while ago and that with a simple option allows you to decide in which currency we want to be paid. You can also do this from a mobile phone, both Android and Apple, using a convenient app: access the settings menu of your profile, go to the "Interest Preferences" item and select Bitcoin. By doing so, once stablecoins such as BUSD are deposited, an interest of 8% begins to accrue. This is a simple method that allows you to be exposed to non-volatile capital (stablecoins) and accumulate a certain amount of Bitcoin monthly (just like an accumulation plan).
In fact, if you consider an amount of $15,000 deposited on BlockFi, you would receive $1200 (8%) annually, which is equivalent to $100 per month.
Pros: Exposure to a stable asset, income comparable to that of the savings plan.
Cons: Exposure to risk related to centralized finance.
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