Do you want to invest in BTC? Are you already investing, but unable to achieve your return goals due to volatility? This article is for you. Here, we share with you the conclusions of a recent publication revealing the best strategy to obtain maximum profitability from your BTC investments. If you have generally applied the market timing method which consists of buying at a low price to sell at a higher price, there is another method which could allow you to have the best possible return. This is, for example, the DCA method. On X (formerly Twitter), a user discusses the advantages of this method.
The dollar cost averaging or DCA method: the panacea?
In an article published on X, an anonymous user shared the benefits of adopting dollar cost averaging for cryptocurrency investing. Using capturing a price charthe demonstrated that investments made based on the DCA method performed better than others.
The article reveals that several investors started buying BTC in November 2021, at a time when the cryptocurrency was at its peak. Having continued to buy when the cost fell, they managed to lower the weighted average cost of their BTC to $26,386.
So, although they bought at high prices and the value of the cryptocurrency is currently hovering around $26,400, they are not in the red. The dollar cost averaging method (or Dollars Cost Averaging in English) is in fact a programmed investment strategy.
It consists of building your asset portfolio by investing a fixed amount at regular intervals, without taking into account variations in the price of this asset. The principle is that the same amount will buy a small volume of assets when prices are high, but will buy more assets when prices fall.
Drawing its strength from the volatile nature of cryptocurrencies, this investment method allows you to benefit from a low average cost, which, ultimately, allows you to achieve a good return.
Effective in the long term, Dollar Cost Averaging is therefore the opposite of the market timing method which, based on the short term, consists of buying when prices are low and selling when they increase.
Application of the DCA method by the company MicroStrategy
In his article on the method, the author gave the example of the company MicroStrategy. He specifies that if the company today holds the largest volume of BTC holdings in the world, it was in 2020 that it began to buy them little by little. We were then at the start of a bull market.
MicroStrategy purchased 21,454 BTC in one go, a transaction that helped keep the cryptocurrency’s price rising for a while. When BTC subsequently crashed in 2022, MicroStrategy clearly found itself in the red.
However, we note that the company’s investment is currently approaching the break-even point of its investment, because the drop in the price of cryptocurrency has reduced its average cost.
The lesson that the user seeks to share in this demonstration is certainly the following: whatever the price at which you invest in BTC, you can maximize your return by choosing to invest small amounts over a certain period of time. This strategy helps smooth out the level of risk and allows you to accumulate a large number of assets in a more flexible manner.
For investors, bitcoin is already a form of money
As the global economic situation continues to deteriorate with economic crises, geopolitical conflicts and inflation, several investors have found refuge in cryptocurrencies and particularly bitcoin to secure and grow their savings.
It cannot be otherwise when we know that from April 2017 to April 2022, i.e. over a period of 5 years, the price of BTC has almost multiplied by 30. We will also recall, as indicated by report published by the New York Digital Investment Group, that apart from institutional investors, more than 46 million American adults have owned BTC since 2022.
In May 2023, blockchain data provider Glassnode claimed in an article that over 1 million wallet addresses held more than 1 BTC. It must be believed that holders had taken advantage of the drop of almost 75% that took place during the year 2022 to accumulate additional fractions of BTC at low prices.
While it is true that these wallets are not necessarily held by a single person, this relentless focus on cryptocurrency during a bearish phase proves that BTC is increasingly establishing itself not only as a currency, but also as a reliable choice for alternative investment.
In the words of the CEO of the world’s largest consulting firm, deVere Group, “wealthy investors have understood that digital currencies represent the future of money and do not want to remain in the past.” Moreover, there are more and more reasons to believe that the best time to buy more bitcoins is now.
BTC: soon the race to $148,000?
Despite the high volatility that characterizes cryptocurrency, bitcoin seems to have won the hearts of the public both among individual investors and institutional investors looking for alternative investment solutions.
If financial markets are never absolutely predictable, several indicators show that BTC is approaching its best January since 2013.
Indeed, the inflation rate has already reached its peak in 2023. We can expect a softening of the global economic situation. On the other hand, monetary policies are now showing themselves to be less and less rigid towards cryptocurrencies. To borrow the words of the deVere boss, the crypto winter of 2022 is “thawing out”. Some experts even claim that bitcoin could reach 148,000 after the halving of 2024. For the moment, eyes are on the charts.
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