Read out of the corner of your eye! – L’Expresso du Coin, the series dedicated to those in a hurry. A quick read, for beginners and experts, to entertain you over a coffee. little stories, cryptographic vocabulary And news to educate yourself while having fun. Today we face DCA.
History around the corner
Alastor Prudent has always been a meticulous person. He always reads an email twice before sending it. He conscientiously classifies all his bills and always looks at the instructions of a product before using it. Alastor is also a man of vision. He intends to prepare a pension in the sun for his old age. And far from making fun of himself, he doesn’t count on government assistance and his so-called retirement savings.
It is all these topics that he often discusses with his best friend, Gaspard Yeure, while having his usual coffee at Krypto Bistrot. And that day, Gaspard is in a bad mood.
— I put all my savings into Bitcoin in November 2021, Gaspard complains, annoyed. Summarizing the case, today I am left with 30% of my bet. Me dreaming of buying a Tesla. Frankly, I will never be caught again.
“I warned you, my dear Gaspard. But Monsieur always thinks he’s smarter than everyone else. You should have done like me. Invest €50 in Bitcoins at the end of each month, Neither more nor less. I don’t deal with charts, I know that over time the price of Bitcoin goes up, until proven otherwise.
– Oh yes ? Gaspare is surprised.
— And yes, you know that bitcoin was worth less than a dollar in the beginning, right? So, I have to admit that I bought like you in November 2021 when BTC was at $69,000. But I’m still buying it today when it’s around 20,000. Enough to lower my average entry price and be ready when the course will resume its crazy flight.
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In the corner of the head – The DCA
the DCA or Dollar Cost Averaging it’s a investment method often recommended when it comes to buying stocks or cryptocurrencies. Many inexperienced investors enter cryptocurrencies and decide without preamble to invest all their savings at once. However, this method most often leads to failure. Because if the price then starts to fall, it’s hard not to panic.
The DCA idea is as follows. Provide an initial amount to invest, for example €500. So buy at regular intervalssay monthly, with a small part of this amount. Typically €50. If the price then starts to rise, you’re glad you invested. Naturally, at that time you will earn less than if you had deposited your €500 all at once. However, you still generated profits. And if, on the contrary, the price goes down, then you will also be happy that you still have enough to buy at a lower price next month. This process allows you to smooth all year round its average entry price on an asset. And most importantly, it allows you to preserve your nerves and to defend against FOMOas we explained to you in last week’s Expresso du Coin.
Stay in the corner!
To start a DCA, on any asset, one essential thing is required: beliefs. Without it, you don’t need to get started. First of all, we must try to understand the hidden values behind this mysterious Bitcoin. Sure, it takes time to ask, Of to educate. To try to understand why so many people are interested in this famous digital gold. It can’t just be speculation, there has to be a deeper reason, right? Educating people about Bitcoin. A not so crazy idea that is starting to catch on even in American schools.
There are many ways to start an investment. And it’s very hard to avoid mistakes when you’re a beginner. Indeed, the psychology of markets is particularly complex to understand. One of the recommended methods is precisely that of progressive investmentthe DCA, in order to build a small nest egg at your own pace this alternative currency called Bitcoin.
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