Dollar Cost Averaging Bitcoin

Looking for a solid investment strategy for Bitcoin?  Look no further then the tried and tested Dollar Cost Averaging strategy.  Sure it's not the most sexy, but it will give you a better shot at buying bitcoin at the most favorable price.

What is Dollar Cost Averaging?

DCA or Dollar Cost Averaging is an investment technique where small amounts of capital are invested at regular intervals, regardless of what the price is.  The theory behind this investment strategy is: because the asset should rise in value, over time it won't matter when you invest.  Sometimes you'll buy in when the price is low and sometimes when the price is high.  Over time this will even itself out.  That's the “Averaging” part!

How well does this strategy work?

This strategy works.  Not even the best traders can't accurately predict when the price will rise or when it will fall and trading bitcoin can be risky.  The beauty of this strategy is that you don't need to be a financial or trading wizard.  It just works.

This method has proven successful in more traditional markets such as stocks.   And popular savings apps such as Acorns employ this method with great success.

To make sure DCA works for you when investing in Bitcoin there are a couple of things you need to remember:

  • You need to invest at regular intervals.  DCA only works when you invest the same regular amounts and the same intervals.   This will ensure that over time you'll get the most favorable price of bitcoin.
  • Don't panic sell.  Bitcoin is volatile.  It's going to go up and down over the coming years.  It might even crash a few times.  But if you keep on investing small amounts you'll get ahead.

Where to Buy bitcoin for Dollar Cost Averaging?

The best place to setup a dollar cost averaging strategy is Coinbase.  This is because on Coinbase you can setup regular buy orders.  These could be daily, weekly or monthly.  And it doesn't just have to be bitcoin either.  You can setup regular buys for Litecoin and Ethereum too.

Coinbase makes it really easy to buy Bitcoin.  They support customers from a variety of customers, offer a super nice interface and have developed a good reputation as the worlds largest seller of bitcoin.

How to Get Started:

Here's how to setup recurring buys on Coinbase.

  1. Register a Coinbase account.  If you register through this link, you'll get a bonus $10 worth of Bitcoin to help you start saving.
  2. Go through the verification process.  This took me less than 15 minutes and it's all done online.
  3. Setup a recurring buy.  This can be done by clicking the “Tools” link and then the “Recurring Transactions” link.

You can setup recurring transactions to happen as frequently as every hour or infrequently as a year.  I would recommend either a weekly or monthly setup.  I've  found that my bank doesn't like it when I make too many of these transactions using my credit card.  And they fail if it's too frequent for some reason.  But this is just my personal experience and most likely won't happen with you.

Find out more about Coinbase here.

Disclaimer: eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Past performance is not an indication of future results.

Cryptoassets are volatile instruments which can fluctuate widely in a very short timeframe and therefore are not appropriate for all investors. Other than via CFDs, trading cryptoassets is unregulated and therefore is not supervised by any EU regulatory framework.

eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro.

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