Read out of the corner of your eye! – L’Expresso du Coin, the series dedicated to those who are in a hurry. A quick read, for beginners and experts alike, to entertain you over a coffee. little stories, crypto vocabulary and news in order to educate themselves while having a good time. Today, we tackle the 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 invoices and always looks at the instructions for a product before using it. Alastor is also a far-sighted man. He intends to prepare a retirement in the sun for his old age. And far from kidding himself, he doesn’t count on government assistance and his so-called retirement savings.
It is all these subjects that he discusses as often with his best friend, Gaspard Yeure, while having their usual coffee at Krypto Bistrot. And that day, Gaspard is in bad spirits.
— I put all my savings in Bitcoin in November 2021, complains Gaspard, annoyed. Summary of the case, I find myself with 30% of my bet today. Me who dreamed of buying myself 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 Bitcoin at the end of each month, no more no less. I don’t deal with charts, I know that over time, the price of Bitcoin rises, until proven otherwise.
– Oh yes ? Gaspard is surprised.
— And yes, you know that in its early days, bitcoin was worth less than a dollar, right? So, I admittedly 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 average my entry price down and be ready when the course will resume its mad flight.
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In a Corner of the Head – The DCA
the DCA or Dollar Cost Averaging is a investment method often advised when it comes to buying stocks or cryptos. Many novice investors land in cryptos and decide without preamble to invest all of their savings at once. However, this method very often leads to failure. Because if the price then starts to fall, it’s hard not to panic.
The idea of the DCA is as follows. Provide an initial amount to invest, for example 500 €. Then buy at regular intervalssay monthly, with a small portion of this amount. Typically €50. If the price then starts to rise, you are happy to have invested. Of course, you will earn less money at the time than if you had put in your €500 all at once. Nevertheless, you still generated profits. And if, on the contrary, the price drops, then you will also be happy to still have enough to buy at a lower price the following month. This process allows to smooth all year round its average entry price on an asset. And above all, it allows you to preserve your nerves and to guard 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 necessary: beliefs. Without that, there’s no need to get started. First of all, we must try to understand the values hidden behind this mysterious Bitcoin. Of course, it takes time to ask about, of to educate. To seek to understand why so many people are interested in this famous digital gold. It can’t just be speculation, there must be a deeper reason, right? Educate individuals about Bitcoin. A not so crazy idea that is starting to gain ground even in American schools.
There are many ways to start an investment. And it is very difficult to avoid mistakes when you are a beginner. Indeed, the psychology of the markets is particularly complex to grasp. One of the recommended methods is precisely that of progressive investmentthe DCA, in order to build up a little nest egg at your own pace in this alternative currency called Bitcoin.
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