Hello Cryptocurrency World!
My name is Trevor and today I am going to be showing us the importance of Dollar-Cost Averaging 😎
"Why should we be doing Dollar Cost Averaging?"
Well, that's because it is actually riskier for you to not be doing some kind of DCA with some of that hard-earned cash you made for yourself!
The facts are, if you don't play, you can't get the pay 😛
So!?!
"What is Dollar Cost Averaging then?"
DCA (or Dollar Cost Averaging) is when someone takes small portions of their savings to ease their way into investing the smart way!
Sticking to a plan is SO important when it comes to investing and DCA is the best, easiest, and most conservative approach to making gains.
For example, Trevor takes $1000 from his savings to invest in something like Bitcoin but doesn't know what to do with it.
Trevor just knows that he needs to do something with his $1000 quickly to not miss out on Bitcoin hitting 6-digits one day!
Rather than take that $1000 and buy as much bitcoin as Trevor can with it right away.
Instead!
Trevor spreads out how much he buys into chunks that will eventually use up Trevor's $1000 in savings.
"Why though?"
Two good reasons why everyone should do this!
1. Everyone can do it very easily
2. If the market goes crazy you don't lose all of your money OR miss out on the high gains
"How the heck does that work, Trevor?"
For starters, it is math so it just does. Numbers don't lie 😎
More specifically, however, this is what it would do in 3 different long-term market scenarios...
Bull Market
Trevor has a Savings of $1000 USD and divides it into 4 chunks of $250 USD
Trevor's plan is to buy $250 of Bitcoin once a week for 4 weeks!
Trevor will do this at the same time every week no matter what the price is.
Week 1
Trevor buys $250 of Bitcoin at $40,000 USD per Bitcoin/BTC
Trevor now has 0.00625BTC worth $250 USD
Week 2
Trevor buys another $250 of Bitcoin but now the price of Bitcoin is $45,000 USD per Bitcoin/BTC
Trevor now has an additional 0.00556BTC he can add to Week 1's savings
Trevor now has a total of 0.01181BTC
Since Bitcoin went up in price Trevor bought less Bitcoin in Week 2 but still has more than $1000 than Trevor started with.
That is because at $45K Bitcoin the total amount of 0.01181BTC is now worth $531.45 USD
Week 3
Trevor uses his 3rd chunk of $250 USD to buy Bitcoin but this time the price is at $50,000 USD per Bitcoin/BTC
Trevor now has an additional 0.005BTC to add to savings!
Trevor's total amount of Bitcoin now equals 0.01681 in his savings account.
With Bitcoin at $50k USD now Trevor's savings in Bitcoin is worth $840.50 USD or 0.01681BTC
Trevor still has $250 left in his original USD savings account to be able to buy again next week at whatever the price might be
Week 4
Trevor uses his 4th and final chunk of the original $1000 to buy Bitcoin again
However, this time Bitcoin had a healthy Bull Market correction back down to $45,000 USD.
Trevor now has an additional 0.00556BTC to add to his Bitcoin savings!
Now, Trevor has a whopping 0.02237BTC and no more money from savings to spend next week.
Since Trevor's savings of $1000 has depleted and Bitcoin took a quick Bearish dive down to $45k.
Trevor checks to see if he has more than $1000 USD worth of Bitcoin!
So at $45,000 BTC/USD Trevor can safely say that his Bitcoin is now worth $1006.65 USD
Results
That means despite how crazy the market was fluctuating in the Bull Market.
Trevor still managed to get the Bitcoin to hodl onto but also still has more than $1000 that Trevor had originally.
To be exact, Trevor managed to gain exactly $6.65 after buying Bitcoin once a week for four weeks.
Trevor also was able to not miss out on the opportunity to take profit during Week 3!
Bear Market
Trevor has a Savings of $1000 USD and divides it into 4 chunks of $250 USD
Trevor's plan is to buy $250 of Bitcoin once a week for 4 weeks!
Trevor will do this at the same time every week no matter what the price is.
Week 1
Trevor buys $250 worth of Bitcoin while BTC is worth $50,000 USD
The total amount of Bitcoin Trevor has now is 0.005BTC worth $250 in USD.
Trevor still has 3 more chunks to spend in the upcoming weeks.
Week 2
Trevor takes his 2nd chunk and buys another $250 of Bitcoin while BTC is worth $45,000 USD
Trevor now has an additional 0.00556BTC he can add to savings this week.
Trevor's total amount of Bitcoin is now 0.01056BTC now worth about $472.50 USD
That means Trevor suffered from a loss, however, he was still able to buy cheaper Bitcoin without timing the market!
Week 3
Bitcoin drops to $40,000 USD and Trevor uses his #rd chunk of $250 USD to buy BTC
Trevor now has an additional 0.00625BTC to add to savings
Trevor's total amount if Bitcoin is now 0.01675BTC that is now worth $670 USD
Again Trevor took a loss Dollar Cost Averaging
However!
Not as much of a loss compared to if Trevor used all $1000 during Week 1 at $50k BTC/USD
Now Trevor still has one last chunk of $250 from his original savings that he can use next week.
But now that Trevor sees a Bear Market, a decision can be made as to whether or not to use the last chunk or keep!
Week 4
Trevor decides to stick to the plan and this time buys Bitcoin at $45,000 USD using the final $250.
Trevor now has an additional 0.00556BTC to add to savings!
The total amount of Bitcoin Trevor now has on week 4 is 0.02231BTC now worth $1003.95 USD.
Now that Trevor has more than the $1000 originally saved, a decision can be made whether or not to sell, or keep hodling!
Results
Although it was not much, Trevor was still able to dodge losing money buying in a Bear market simply buy Dollar Cost Averaging!
By Week 4 Trevor was able to find out that he is definitely in a Bear Market now.
Therefore, Trevor decides to take his gain of only $3.95 USD and cash out his original savings of $1000.
Thank goodness he did this too because in Week 5 the price plummeted for Bitcoin down to $30k!
If Trevor was feeling confident now the Bear Market was over, Trevor could take his $1003.95 USD and buy way more Bitcoins than before.
Consolidation
(Sideways Market)
Trevor has a Savings of $1000 USD and divides it into 4 chunks of $250 USD
Trevor's plan is to buy $250 of Bitcoin once a week for 4 weeks!
Trevor will do this at the same time every week no matter what the price is.
Week 1
Trevor takes his first chunk of $250 USD and buys while Bitcoin is at $50,000USD
Trevor now has an additional 0.005BTC worth $250 USD.
Trevor still has 3 more weeks and 3 more chunks to buy Bitcoin with.
Week 2
Trevor takes the second chunk of $250 and buys while Bitcoin is at $48,500USD
Trevor now has an additional 0.005155BTC to add to savings.
The total amount of Bitcoin Trevor has now is 0.010155BTC
Now Trevor only has two more chunks of $250 USD to spend in the weeks to come.
Week 3
Trevor takes his second chunk of $250 and buys while Bitcoin is at $51,500USD
Trevor now has an additional 0.004854BTC to add to savings!
The total amount of Bitcoin Trevor has now is 0.015009BTC
Next week Trevor still has a final chunk of $250 to buy more Bitcoin again.
Week 4
Trevor takes his fourth and final chunk of $250 to buy Bitcoin while it is at $50,000USD again.
Trevor now has an additional 0.005BTC to add to his Bitcoin savings.
The total amount if Bitcoin that Trevor has now is 0.020009BTC worth $1000.45USD
Results
Trevor did not gain much, however, he was still able to manage to get both more bitcoin and an extra .45 cents.
Not much but remember!
Every little bit counts and this is just a simplified example 😉
Dollar-Cost Averaging Conclusion
Now that we understand how Dollar Cost Averaging works and have provided examples.
We can confidently look at how good our DCA Trading Strategy is working!
That way if we need to adjust our spending habits or Reoccurring Buys on Exchanges.
We can do so with confidence knowing we did not totally lose all of the $1000 in savings we started with!
In a Bull Market naturally, your average gains week to week are going to return better results.
In a Bear Market naturally, your gains are going to go down with the Market week to week.
(important to remember DCA works better-doing routine Sales instead of Buys)
In a sideways market, you are likely going to only see small gains or small losses but at least you were able to carefully buy more Bitcoin!
"Alrighty Trevor, I'm convinced! Now, what is the best way to start doing this?"
The best, fastest, easiest way to get started doing this in my opinion is with Blockfi definitely!
In an account like Blockfi.com, we have the ability to Dollar-Cost Average using Automatic Buying or Reoccurring Trades feature.
Using that feature with Blockfi.com we can easily set up Dollar Cost Averaging to make these Buys (or Sells!) Weekly, Monthly, or even Daily!
On top of being able to Dollar-Cost Average with Blockfi.com, this place also lets you earn interest on both your USD and Bitcoin savings!
Currently, you can gain 8.6% APY in USD and 6% APY for Bitcoin that gets paid out to you on the 1st of every month.
Gain interest for saving your money with Blockfi AND Dollar Cost Average your way to financial freedom?
"Yes, please!"
Plus, right now when you sign up using this referral link or Referral Code
Referral Link = https://blockfi.com/?ref=b2db60a1
Referral Code = b2db60a1
We will both get an extra $10 in Bitcoin if we deposit $100 worth of USD from a connected Bank Account
Signing up requires the standard things that most Exchanges and Wallets require.
They also have an App for both Google Play Store & Apple iPhones!
Still, confused about the benefits of Dollar-Cost Averaging?
Don't worry about it!
Just check out this SHORT helpful video from Investopedia that helps explain DCA visually/quickly
👇
https://youtu.be/QDiq5D7KOHw
Like they mention in the video!
This strategy truly is the best conservative approach to getting into investing or storing your money in something better than a normal bank.
Hope this helps and wishing all of you the best of luck in your Crypto futures!!!
Blockfi.com Referral Link
https://blockfi.com/?ref=b2db60a1
Referral Code
b2db60a1
Deposit $100 after entering this referral code to get an additional $10 in Bitcoin
Video source is from www.Invsetopedia.com
https://youtu.be/QDiq5D7KOHw
