A recent Kraken study reveals that 59% of cryptocurrency investors primarily adopt the Dollar Cost Averaging (DCA) strategy. This investment method, which consists of regularly purchasing an asset with a fixed amount, allows you to better manage the volatility of cryptocurrencies while focusing on the long term.
The adoption of DCA by cryptocurrency investors
The cryptocurrency market is renowned for its high volatility. In the short term, assets can lose several tens of percent in a few days, in the medium term, they can change by 70% over a year, and in the long term, they can record significant price increases during bull run periods. .
For example, although the price of Bitcoin fell by 77% between November 2021 and November 2022, it has increased by more than 700% over the last 5 years. BTC price cycles have made DCA one of the most stable investment strategies.
📈 To go further – What is Dollar Cost Averaging (DCA), this method for easily investing in Bitcoin and cryptocurrencies?
Dollar Cost Averaging (DCA), or “cost averaging investment” in French, is a strategy which consists of regularly purchasing an asset with a fixed amount, regardless of its price at each interval. This helps reduce the risks associated with market volatility by spreading purchases over time and thus mitigating the impact of price fluctuations.
A recent study by cryptocurrency exchange Kraken reveals that nearly 59% of investors mainly adopt this strategy. Additionally, the study shows that almost 84% of investors have used DCA at least once.
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Other data from the Kraken study regarding DCA that are worth the detour
According to Kraken, 50% of investors aged 18 to 29 prefer to adopt a riskier strategy, trying to “time” the market and anticipate its movementswhile 41% choose DCA instead.
The study also reveals that 46.13% of investors consider that DCA mainly allows protection against market volatility12.20% believe that it helps eliminate emotions when making investment decisions, 8.46% see it as an ideal strategy for beginners, and only 6.32% say that DCA helps reduce the price average purchase.
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One of the most interesting points of the study concerns the adoption of DCA according to the income brackets of investors. Indeed, the higher an investor's income, the more likely they are to opt for DCA:
– Among those earning between $10,000 and $24,999 per year, only 30.77% use DCA ;
– 43.48% for those earning between $50,000 and $74,999 ;
– More than 66% for investors with income above $150,000.
These data clearly illustrate the sentiment of small investors, who feel more of a need to invest in riskier assets to try to maximize their gains quickly. However, market reality often reminds them that long-term savings generally remain the most reliable.
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Source: Kraken
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First attracted by the lure of gain, I am now trapped deep into the rabbit hole. With no way out, I just have to share my knowledge and convey the passion I have for Bitcoin. I am also the creator of Adopt a Block, an educational site dedicated to Bitcoin.
Marius Farashi Tasooji
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