Sunday, January 29

How much would you have made in 2021 if you bought a little bitcoin every month?

Key facts:
  • Your savings would have increased by 38.73% buying bitcoin once a month last year.

  • This monthly investment technique is called “DCA”.

One of the best known and simplest bitcoin (BTC) investment techniques out there is DCA. This activity, named after «dollar cost avarage»Or average cost in dollars, consists of investing the same amount of money in a systematic way every certain time. It can be every year, semester, month, week or whatever is most comfortable for the investor, as long as it is maintained for a scheduled period.

Thus, The DCA technique allows averaging the investment made in the long term and increasing savings if the value of the asset rises. Precisely, investors who made the same bitcoin purchase every month during the last year until today managed to increase the value of their funds by 38.73% (measured in dollars), as revealed by the data of dcaBTC.

This level of increase has been achieved by those who have invested little money as well as those who have allocated large volumes. That is, no matter how much they can save in BTC, everyone has been able to perceive this increase if they kept exactly the same investment every month. Here are some examples.

DCA technique adapts to personal savings margin

If you had made a small monthly purchase of USD 25 of bitcoin last year, you would have spent a total of USD 300 and today you would have USD 416, that is, USD 116 extra. The same applies for larger sums.

Buying only $ 25 worth of bitcoin on the 28th of each month from December 2020 to December 2021, you earned an extra $ 116. Fountain:

In case of a higher savings margin, Buying USD 125 of bitcoin per month during the last year, you would have spent a total of USD 1,500 and today you would have USD 2,080, that is USD 580 extra.

Those who have had the possibility to acquire even more, such as USD 1,000 per month in BTC during this period, would have spent USD 12,000 in total and today they would have USD 16,647, which means a profit benefit of USD 4,647.

Buying bitcoin every month reduces the risk of loss

Bitcoin has been suffering from a price drop since the beginning of November. This means that if it rises by early 2022 as some analysts have projected, for example Willy Woo, the profit benefit would be higher.

In case the opposite happens, that is, if the price of BTC continues to fall, the DCA technique allows that, by averaging the investment of each month, the loss is less than if everything was bought together, since not all purchases they will have been with bearish prices. Investors who follow the DCA take this risk because they believe that in the long term it will appreciate.

One of them is the Colombian trader Juan Rodríguez, who believes that, Although money can be lost in the short term with the price falls of BTC, at the same time it considers that they are an opportunity to profit and buy cheaper. This he attributes to the fact that he believes that in the long term it will increase. That is, according to your thinking, it will always end in profit. Therefore, he plans to continue this investment for five years.

Juan Rodríguez, who is better known as “Papa Bitcoin,” is a cryptocurrency analyst who has a YouTube channel with 200,000 subscribers. As reported by CriptoNoticias, it recently revealed its monthly purchases in bitcoin, with which it has managed to increase its savings by 154% in just over a year. That’s because, in addition to consistently investing each month, you also make an extra purchase when the price of bitcoin drops.