Investing in cryptocurrency can be challenging due to the significant price fluctuations. Many investors therefore opt for dollar-cost averaging (DCA), a strategy in which you regularly invest a fixed amount, regardless of the rate at that time. Let’s see the results if you had invested 20 euros in Shiba Inu (SHIB) every week since January 1, 2023.
What is DCA?
The DCA strategy is simple and effective. You invest a fixed amount in an asset such as SHIB at fixed times. This means you don’t have to ‘time’ the market, which can often be difficult and stressful. By investing periodically, you sometimes buy at a high price and sometimes at a low price, leading to an average purchase price over time.
Benefits of DCA include spreading risk and avoiding emotional decisions based on short-term fluctuations. This makes it an attractive option for long-term investors.
SHIB rises sharply
Suppose you had bought 20 euros worth of Shiba Inu every week since January 1, 2023. You would have invested 1,480 euros so far. However, the current value of your portfolio would be $3,660.91, meaning you made a profit of $2,180.91. This amounts to a return of 147.36%.
The progression if you had invested 20 per week in 2023 – Source: CryptoDCA.
The price of Shiba Inu has increased significantly in 2024, contributing to this impressive return. Patience was essential, but the reward is clear: a more than doubling of your investment in just over a year.
Shiba Inu, like other cryptocurrencies, has experienced large price fluctuations. Through a structured approach such as DCA, you as an investor can reduce the stress of market movements and avoid making decisions based on emotions. This makes it a valuable strategy for both new and experienced investors in the dynamic world of crypto.
In a market as volatile as cryptocurrency, DCA offers a way to invest steadily and potentially earn significant returns without the constant need to track or try to time the market.
Automatically buy SHIB on Bitvavo
Bitvavo recently offers a handy new feature to apply the above strategy without worries. Instead of having to log in every week or month to make your bitcoin purchase, Bitvavo can now automatically arrange this for you.
The DCA function is easy to set up. You choose which crypto you want to buy every week, every other week or month and the day on which you want the order to be executed. Bitvavo will then execute the order at a random time on the day you choose. The purchase will be made with the EUR balance in your account. It is therefore important that there is enough credit on your account and that you understand that you must authorize Bitvavo to automatically deduct credit from your account.
