I want advice on Dollar Cost Averaging versus Lump Sum Crypto Investments

[jarethdf]

Hello everyone,

I have been debating between two approaches dollar cost averaging &lump sum investing. I understand that the crypto market is highly volatile; so I am wondering if DCA might be a safer way to reduce risk, as it spreads investments over time. On the other hand, lump sum investing could take better advantage of market dips but it seems riskier in such an unpredictable market.

For those with experience in crypto, which method have you found more effective for long term growth? How do you decide when to buy in such a fluctuating market? Are there certain coins or tokens where one approach works better than the other??

As well, I found these resources when doing research on this; https://forum.mustachianpost.com/t/safe-swiss-banks-to-buy-crypto-withtensorflow & if anyone have any resources, tutorials or personal experiences please share with me, It would be greatly appreciated!!

Thank you…

[Dr.PI]

@jarethdf

the crypto market is highly volatile;

The difficulty, from my point of view, is not that it is volatile, but that it is highly speculative. Plus there is always a question of custody.

With a global stocks market portfolio, I am pretty sure that my investment will be there in 20 years, notwithstanding markets developments and potential broker failures. With crypto, you know.

@jarethdf

For those with experience in crypto

I am not, but

@jarethdf

which method have you found more effective for long term growth?

Steady contributions. I also don’t want and don’t have time to do any kind of research.

@jarethdf

How do you decide when to buy in such a fluctuating market?

Like with all investments: once per month after getting my salary.

Indexing crypto

An update. After the FTX collapse I used an opportunity to rebuild my crypto index portfolio. This time I decided that the market is right and made a strictly market capitalization weighted portfolio. The procedure is outlined above. I was hesitating very long time about how many coins to take. Too little felt like not representative enough, too many is lots of hassle. Finally I converged to the top 20, which for extremely top-heavy crypto market is already very deep into low weights. I finall…

Please allow me to introduce myself: the story of Dr. PI

Assets allocation is the key. I am very far away from it, but my idea is to not buy crypto if crypto portfolio’s value is more than 5% of my main stocks + fixed income portfolio. If it is more than 10% of the same, sale the part above 10%.

Buying crypto for Swiss residents [2023]

Are there any changes after a year? I was talking about FTX, but we all know what happened to it… Binance does not allow you to deposit USD, the only possibility I think is via sepa with advcash (1€ commission). Do you use Kraken or Swissborg? The plan would be to make a PAC on BTC and send them to a cold wallet. So have the lowest possible fees for deposit and withdrawal.

[Abs_max]

Only suggestion I would have is to be very sure that you are convinced about crypto and understand the asset class very well. A lot of coins are scams and lot of exchanges ended up in trouble. Sometimes even employees working in these foundations also know that there is no use case for many coins.

So most important thing would be to find the coin you really believe in and you have some sort of way to understand its terminal value. Lot of data on internet is based on marketing and it not backed with actual adoption. DCA or lumpsum is less of a debate

For example if you believe BTC will go up to 100 Million per coin, then buying at average cost of 50K or 70K wouldn’t make much difference. But if you believe BTC will go to zero, then any money you invest at whatever cost basis will end up at zero.

[Butch]

“For example if you believe BTC will go up to 100 Million per coin, then buying at average cost of 50K or 70K wouldn’t make much difference. But if you believe BTC will go to zero, then any money you invest at whatever cost basis will end up at zero.”

I don’t “believe” either. Frankly speaking, I don’t have and have no clue. I am making steps into crypto more as an option. Kind of like a lottery ticket. Just ensuring I have a position (and a piece of the pie) just in case it does positively explode.

I am doing a DCA approach here albeit not time based (e.g. each month or quarter) but by permanently having a small purchase order out there with a limit price which will trigger the purchase.

This is using the IBIT ETF though, not actually holding custody myself.

[Joe_Coconut]

My recommendation would be DCA.
And educate sourself about “crypto”. Mainly understand the difference between bitcoin and all the others.

As I see it, there is bitcoin and there are a lot of scam coins. Bitcoin indeed has an attractive return/risk profile.
I wouldnt touch any other crypto, as i consider them basically a inferior copy of bitcoin or straight out fraud.

[Joe_Coconut]

@Butch

This is using the IBIT ETF though, not actually holding custody myself.

I would agree this is the best and safest method currently (for the average investor)

[markus654]

@Butch

This is using the IBIT ETF though, not actually holding custody myself.

Bitcoin is the only investment where I would put a stop loss (because I would be afraid that the thing would crash completely at some point and never recover). However, the IBIT ETF would not be suitable for a stop loss; I would rather use a 24/7 BTC exchange.

[Joe_Coconut]

No offense, but i have a very different opinion on that.

Strongly recommend against using a crypto exchange. Watch the history of those places… hacks, rug pulls, bankruptcies, etc. With an ETF of a reputable provider, your assets are segregated and safe from a bankruptcy, verified by indepenauditors, etc…

Stop loss: whats the point with a very volatile asset? You get stopped out and sell at the worst possible moment. Then miss the recovery.

If you are afraid of the asset class you shouldn’t invest. But please dont introduce trading for a buy and hold portfolio.

[stojano]

My way:

1. Only BTC (not crypto)
2. Buy on Kraken and Relai (my support of the swiss bitcoin company) every month and leave it there
3. every 3 to 4 months move to cold wallet and consolidate (it’s really not that hard, and maybe you’ll learn something about Bitcoin… just don’t forget/loose the 12 / 24 words)
4. BONUS: Add the max 5% IBIT to the VIAC 3a accounts.

[Joe_Coconut]

@stojano

every 3 to 4 months move to cold wallet and consolidate

Why not monthly?
Avoid small UTXO ?

[stojano]

@Joe_Coconut

void small UTXO ?

Not really. Most of the time was waiting for smaller fees. Further, save on fees… instead of paying 4x the fee.