Since the all time high of Bitcoin has fallen-rates – a loss that also noted the Shrinkage of the own portfolio. With the Dollar-Cost-Average approach, you can hold more losses, but smaller.
After the Bitcoin price performance in July is quite positive, he broke again in the last days. Thus, the hopes of a coming bull market back then, and the mood in the Community has deteriorated –and understandably so – rapidly. You read of people who have lost over 90 percent of their Investments, because they are joined at the end of 2017 in the market.
Nevertheless, there are not a few who continue to follow the market and try the right Moment for a new Investment rewarming. “BTFD” is one of the advice that you like to hear in this context is: Buy the fuckin dip. In the daylight it is the acronym a consequence of the classic “Buy low, sell high”: You should try to buy if possible in the course minimum.
But when one has reached this ominous course minimum? The Internet community was not idle, and has commented on the Slogan “Buy the dip” with various Memes ironically. Often developed after a Dip, another Dip, and if you had no more money to “continue shopping”. Frustrated some of those who followed the acronym BTFD had to see that he’s currently in the Minus.
Dollar-Cost-Averaging – Simple regular Deposit for damage limitation
Another approach we discussed some time ago also in the case of BTC-ECHO, is the Dollar-Cost Averaging, or DCA, in the German-speaking area, even as the average effect cost known. In the Dollar-Cost-Averaging, you have to pay, regardless of the price movements, regularly a fixed amount to invest in the Portfolio. Similar to the case of a home loan and savings contract or a retirement pension, then, for example, a monthly 100 Euro in Bitcoin. What that would mean for the since mid-December, lasting to the end of descent?
We consider two Investment Cases: once the one-time investment, to be invested with the start of a full sum, and the second is the Dollar-Cost-Averaging. We assume that the two unhappy investors, in each case the 16.12.2017 in Bitcoin invested. Negative it is to be noted that both of the write current is still negative Numbers, but the difference is huge:
We can see the relative portfolio value, depending on the date. Black is listed once, plant, red, the Dollar-Cost-Averaging approach. While the one-off investment must be just capturing 70 percent of losses, in the case of the Dollar-Cost-Averaging less than 40 percent. You can also see that the Portfolio of the single investor, the trend is still in an overall Downward, while the DCU Portfolio has been increasing since February.
We see that in a bear market, Dollar-Cost Averaging pays. Many Fund managers emphasise that, in contrast to that in a bull market, the one-time investment is preferable – of the lever is due to the larger invested capital.
Dollar-Cost-Averaging features, however, in the case of Bitcoin the simplicity. We don’t know when Bitcoin is in a bull market. Still less do we know how long this will take. Accordingly, the constant Re-Investment in the simplest way, which also brings in bullish times is quite profits and in bearish times, keeps the losses low.
Beyond the Dollar-Cost-Averaging: Mayer-Multiple, Benefits of trading signals and portfolio management
You can certainly choose a more complex approach. Mayer Multiple we have discussed on BTC-ECHO and by means of back-testing analyses. Similar approaches could be selected and, for example, the MACD in the daily chart as a decision aid for an Investment benefits: at the beginning of each month to check whether the MACD is increasing or falling. In the first case, we have to invest money, in the second case, we set it for the next month.
Finally, it is not limited in the case of an Investment in crypto-currencies to Bitcoin. You can set up a Portfolio and this on a monthly basis through a Reinvestment of something to optimize. Portfolio creation is a little more complex. In an older issue of crypto-compass, we have examined this topic in a little more detail. For those who do not want to create the Portfolio itself, are now also three sample portfolios in the said crypto compass presented. These are actively managed on a monthly basis are discussed.
In the first step, the next few months of the bear market, you can start simply with a Dollar-Cost-Average approach. The Investment of Bitcoin or any other crypto is then successively currencies build and the impact of falling rates to cushion something.