Bitcoin Saving Plan ("Sparplan")

Assumption
The latest Bitcoin rally and more and more serious investors investing a (small) part of their investment into cryptocurrencies make me think that crypto is something all of us should have in our portfolios (reasonable quantities/percentages of course).

Problem
The problem is that the market is much more volatile than the stock market. It is impossible to say whether the current Bitcoin high is just the begin of an ascent to new heights or whether the bubble will burst and the rate falls back to where it was a few months ago. But even in this case it is likely that crypto will stay relevant.

Possible Solution?
To counter to problem of volatility, I thought of opting for a Bitcoin saving plan (in German “Sparplan”), that would invest a couple of hundred CHF into bitcoin every month, either automatically (as in a Sparplan) or manually. That would allow me to do “Dollar Cost Averaging” on a highly volatile investment. I have read this forum for quite a while now and know that views on Dollar-Cost-Averaging for ETFs/stocks differ. However I would be interested to know what you guys think about it for crypto?

I use LS for my ETFs / stocks and DCA for crypto for the reasons you mansioned.

Assuming I would consider cryptocurrencies an investment venue worth pursuing, I don’t see why I would not consider it as part of my normal allocation. That would mean I’d sell it when it’s high to buy other assets that are low and buy it when it’s low by selling other assets that are high.

If the risk of an asset ever going to zero was bothering me, I’d either rebalance only in one way (that is, out of it when it’s over my desired allocation but not putting more money in it when it’s down) or, which I’d prefer, decide on a thresold under which I am not willing to go to buy more (that is, if the price drops below a certain level, I’d stop buying that asset (but not sell what I already hold). That level could be defined as an arbitrary percentage of the last high rather than an arbitrary fixed number).

I do something like that with a tiny sum in Revolut.

You open a BTC or other crypto vault and automate monthly payments into it. It’s not straightforward to calculate returns but it can be done.

Ok, good to hear that you guys see it the same way.

Revolut is convenient, but also too expensive (fees). Does anyone have an idea whether the established providers (Coinbase, Kranken etc.) offer a savings plan model or something like that? Or would one still need to manually invest?

Also, if I understand the business case of most operators correctly, they simply take a few for each transaction (f.e. 1%). In this case, I could even do more Dollar-Cost-Averaging and buy regularly every week or two (at smaller amounts). Do you think this would work?

Revolut is for free in the basic version.

If you want more features, you have to pay.
I pay for Revolut, but I get back way more in saved forex than I pay in fees.

You just get to trade Crypto with Revolut, you can’t spend it.
It is a way to solve your problem.

The fees are not transparent, but I suppose they get some margin on it. Read the T&C on crypto on Revolut here.

I asked VIAC if they would provide any solution to invest in BTC.

They said, if there is a vehicle in the future (Bitcoin ETF) they would be open to it. So maybe in the next 5 years there will be an opportunity to do it with 3a.

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I will try this in the coming week:

The fees are very high: 2.5%/transaction for the Standard Account and 1.5%/transaction with the Premium Account

My point is not trying to persuade you to use Revolut, but that it offers the functionality you’re looking for.

Well, that’s about the standard credit card fees for forex transactions.
It’s high or low depending on your alternatives. At least now you have a point of reference.

Also, on a more personal note:

  • I am more a set and forget investor, so I’d prefer some other investment than cryptocurrencies. The constant monitoring of the ups and downs is quite time consuming and stressful. Better to use the time to make some other income.
  • Then, crypto is speculation. Since there is no interest to be gained, it’s basically a bet that crypto will rise further. There is very much a danger of a bubble. If you’re comfy with that, good for you.
  • Before you commit bigger sums, please look at these two YouTube videos that offer a rational assessment of BTC as an investment:
    -If you want to speculate on something rising further and further, I’d personally go with buying Tesla or Amazon stock. Or some crazy fund like ARK, or 3 times leveraged NASDAQ (QQQ3).

Ben Felix:

Plain Bagel:

Personally I wouldn’t use Revolut for serious crypto investing because you don’t get custody of real cryptocurrency. It’s simply a CFD, so great for speculation but you don’t hold the underlying asset. I use it to make a quick buck off bitcoin spikes, but for real investing I want to own real bitcoin and have full custody.

I don’t know of an automatic bitcoin savings plan, and this kind of service would likely have fees attached, but it could be a good business opportunity.

If you are willing to spare 15 minutes a month, simply set up a monthly standing order to a trusted bitcoin marketplace so the money is automatically transferred to your trading account. Then buy the cryptocurrency on a specific day of each month.

I use Lykke for this purpose because it has a CHF bank account and I invest Swiss francs. But there may be more liquid and/or cheaper options.

I would recommend withdrawing to your personal wallet so you have full custody (no counterparty risk). I use Opendime because I like the bearer security functionality, but any wallet would do. If the service provider charges a minimum withdrawal fee, it may make sense to withdraw less regularly to minimize withdrawal fees.

Of course, if you will only hold short-term and then sell, the counterparty risk of leaving it in the service provider’s custody may be worth the convenience of having it ready to sell when the price is right. In this case you should at a limit and stop.

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OK - I tried this command line tool in the meanwhile and it works as advertised. It can even sweep the balance to your own wallet (if it makes sense from a cost perspective).

Kraken is also quite robust and cheap. Recommended solution for folks that want to dollar-cost-average into BTC.

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I did some research, so far I found the following two options for an automatic saving plan:

Revolut
You can create a saving plan, on a daily, weekly or monthly basis. Very easy to do, through the Revolut app. Downside are the high fees (2.5% each for buying/selling with the Standard package) and Revolut not being a crypto-provider with all the usual possibilities (i.e. to “own” the asset).

Coinbase
Also very easy to set up recurring purchases (https://blog.coinbase.com/easier-recurring-buys-and-sells-on-coinbase-9a3cd7ea934e). Fees are 1.49% for each transaction and some minimum fees apply (relevant if you choose to buy f.e. weekly for just a few CHF).

Let me know if you come across other options.

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My two cents:

  • if you use Coinbase, do yourself a favor and use the pro version. It is free, you can access it from your normal coinbase account in one click, and you automatically have lower fees.
  • if security is important, use Kraken instead of Coinbase. I also think they have lower fees, but I am not sure about their possibilities from recurring purchase.
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Anyone using Bitfinex?
I don’t recall it being mentioned much around.
Is it because of some specific risks/costs around it as an exchange?

Another benefit of the tool is that you can determine the hour in the day. Asian trading hours (more miner selling over there?) seem to work fairly well.

It seems that someone did the same for Binance

I personally won’t feel safe letting any serious amounts to sit in this exchange. Despite being there since a while, Bitfinex has shown a tendency for not being that transparent on their activities, specifically with their foggy interaction with the stablecoin Tether that is still a concern among the crypto community.

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Thanks for the heads up, I was not aware of those events, as I am not in the “game” for a while now.
Just have some old stuff sitting in the back, which now woke up nicely again. :grin:
Will keep on HODLing as usual.

That should probably be a concern with any trading platform, i.e. any serious amount not sitting there but in an own wallet.
But I understand some are a bit more of a concern - thanks for pointing out.

I used to have a account but closed it after the tether fud 2019. My understanding of Bitfinex was that they are doing some shady business and since I have reduced my crypto portfolio to some essential coins I don’t need Bitfinex any more. It seams to be a good choice if you want to use leverage which I am assuming you are not :).

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Yes, I prefer to spend a little more on fees and have something more secure.

I have the feeling that Bitcoin can only go up in the long run:

  • Supply is limited to 21 million, but I think that 4.5 million coins are lost forever.
  • People will continue to lost coin (a mistake, lost password, death, ect) , maybe at a rate of 2% a year, so the supply will decrease over time.
  • Bitcoin could replace gold. However, I don’t think it could replace digital payments. Currently, only 7 transactions can be done each second (will maybe change with the lightning network in the future) and as the bitcoin is deflationary currency people will tend to hold it instead of using it as a mean of payment
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