In this guide, we take a look at three simple ways to increase your Bitcoin holdings without betting on altcoins.
If you’re too scared to touch altcoins due to the massive losses many have experienced since their all-time highs, these three strategies can help you avoid diving into the altcoin market all together.
Be aware however that some of these strategies involve high levels of risk. The strategies discussed here are described for educational purposes, and this article should not be viewed as financial advisement. Never invest what you cannot afford to lose.
Let’s take a look at how cryptocurrency investors and traders can increase their Bitcoin holdings without the help of altcoins.
Dollar cost averaging (DCA)
The idea behind dollar cost averaging is simply to buy Bitcoin, or any other cryptocurrency, on a recurrent basis. This can be every day, week, or month. Usually, advocates of the above strategy prefer to set certain days to make purchases and stick to their schedule – almost like a direct debit. Purchases are made at roughly the same hour so that the asset is always bought independently of the short-term price.
This “dollar cost averaging” strategy is regarded as one of the safest, as it helps investors and traders to get less emotionally connected to their investments. It’s way easier to buy a bit of something every week than a lot of something in a single transaction.
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DCA is usually associated with hodling, as investors keep their crypto for long periods of time.
Buying the dip
Buying the dip refers to purchasing an asset after it has declined in price. It has different contexts depending on the situation in which it is utilised. According to Investopedia, some traders may say they are buying the dip even if an asset is in a long-term strong uptrend in the hope the uptrend continues after the minor dip or drop. Others may use the phrase when no uptrend is present, but they believe an uptrend may occur in the future.
Buying the dip may work during bull seasons, however it is clearly more dangerous than DCA simply because you are looking at the short term rather than the long term. Investors usually follow the market regularly and have certain inclinations towards short-time price action as you can become more attached to price fluctuations.
Some proponents of this strategy advise that investors use tactics to not become too committed to their positions by implementing stop-losses and clear sell targets.
Buying the dip may work if investors are disciplined enough to not fall into the temptation of buying at the wrong time – for instance during long bearish periods.
Pick one (and only one) indicator
If you follow my daily price analysis, you’ll notice I hardly use technical indicators. I focus mainly on long-term price and volume, which in my eyes provide enough information for me to base my decisions upon.
Having said that, this strategy may seem like it won’t work in the long term, as you may be thinking you’ll miss important lessons from looking at more data.
Even though some traders argue more information is always better than less, I say it depends on the source. For example, I find it hard to believe that Bitcoin will ever reach new all-time highs without a massive boost in the hash rate. For the hash rate to reach new all-time highs, the network needs either massive performance improvements – which means serious money is going into research and development – or a wave of new miners to join in.
Independently, my point is there are indicators outside of the obvious that you can use to measure the health and wellness of a public network like Bitcoin.
You can head over to Bitinfocharts or blockchain.info/charts and have a look at the network stats. Ignore the news and noise about price action and focus on the bigger picture.
Will sticking to a single indicator be perfect and allow you to never miss an opportunity? Of course not. But it will most definitely help.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.