Faced with a destabilized cryptocurrency market, an individual can protect himself against volatility by smoothing his investments.
The cryptocurrency market is characterized by its volatility, many investors and individuals having suffered in recent weeks. A month ago, the ecosystem experienced a crypto crash and since this weekend, the market is also heavily disturbed.
At 9:00 a.m. this Thursday, the price of bitcoin is trading at 21,750 euros, it has risen 3.3% since Wednesday. But over a week, the price of this cryptocurrency remains down 28%. If some are wondering if now is the (right) time to invest in cryptocurrencies, there are techniques that can potentially be of great service to investors, especially those who want to take advantage of the current rag to try to take a position.
We don’t have to go cash and buy and sell cryptocurrencies or fractions of cryptocurrencies. We can opt for more constructive strategies over the long term and in particular that of DCA or Dollar Cost Averaging.
This is a gradual and regular positioning method over the long term, valid for a whole host of assets (and often recommended on the stock market), but very well suited to cryptocurrencies to go about it constructively while avoiding too much volatility.
Invest small amounts on a regular basis
Concretely, this method proposes to invest on a regular basis, according to a given period (every week, every month, etc.). An individual then invests a small sum to position himself on one or more assets, rather than spending large sums at once, without risking being returned by the market. By having this long-term strategy, we smooth out market volatility. Indeed, we are not looking to buy “at the lowest” to sell “at the highest” (which is very complex in practice) but to buy regularly with different entry prices.
So certainly the gains will not be as astronomical as if we make a big round trip on a particular cryptocurrency. But at least, we smooth out any losses and we benefit more regularly from market trends. Undoubtedly a more constructive, more “savings” perspective, and in the current state of the market it is undoubtedly the least risky strategy.