To celebrate the 12th anniversary of Bitcoin, the Journal du Coin is teaming up with StackinSat to launch a new service: Coin Savings! This platform allows you to position yourself on bitcoin with confidence, thanks to the programmed investment.
Coin Savings was born from a conviction: Bitcoin is here to stay. If its adoption as a means of payment is not yet assured, its function of store of value is confirmed. Fears relating to the inflation of state currencies, and the low return on traditional financial investments make it a very attractive asset for diversifying and protecting one’s savings .
In this context, the constitution of a Bitcoin Savings Plan makes perfect sense! Discover our new platform, created in partnership with StackinSat.
What is dollar cost averaging ?
The cost averaging dollar , or programmed investment is a strategy of investing regularly a fixed amount of a financial asset. This strategy makes it possible to smooth out its entry point . It is therefore particularly suitable for volatile markets such as cryptocurrency.
The price of bitcoin (BTC) since 2011
In the current context of strong price appreciation , there will be plenty of opportunities to invest at the worst time (on a market high). Thus, the overly emotional saver can be subject to the famous FOMO : the fear of missing out , the fear of missing the boat. He may be tempted to invest all his capital dedicated to cryptocurrencies on a whim . And that can turn out to be very disappointing ! For example, the investor who acquired all his bitcoins in January 2018 will have had to wait almost three years to be profitable.
With dollar cost averaging , the same investor who invested a fraction of his capital each month , regardless of price fluctuations, would have achieved a much better capital gain . And above all, without the fuss!
If you want to invest part of your capital in bitcoin , but you have neither the soul of a trader nor the time to keep your eyes on its price, this strategy is for you!
Is it a profitable bitcoin strategy?
On bitcoin, this is a particularly profitable strategy . For example, here is what the Coin Savings simulator gives for an investment of 100 euros per month since January 1, 2018 :
Bitcoin (BTC): DCA simulation since 2018
Simulation of a programmed investment of 100 euros per month since January 1, 2018 in bitcoin.
Thus, having started to invest periodically during the bear market of 2018, the realized capital gain would be 264% . By investing the same amount all at once on January 1, 2018, at the price of $ 13,500, the capital gain would be 152% .
DCA is therefore a profitable investment strategy in a long-term bull market . It allows you to increase your exposure to this market regularly, while limiting the risks associated with its volatility .