Why buying crypto regularly beats timing the market

Buying cryptocurrency may seem like a simple choice at first, but in reality it is not. The market is designed to fool most people, most of the time, due to its volatile and unpredictable nature. Many beginners and experienced investors attempt to buy the bottom and sell the top—what’s also known as “timing the market”. As good as it sounds, in reality this approach leads to burning out and leaving the market because of a lack of capital and trust.

At the end of the tunnel, there’s always light, however—an alternative that reduces stress and provides long-term gains. What is DCA? Let’s find out.

Understanding regular investing

Who likes losing money? No one. Regular investing, or dollar-cost averaging (DCA), is about creating a habit of putting a fixed amount of money on a regular basis into crypto or other assets. Does it guarantee profit? Absolutely not, but unlike market timing, it focuses on long-term growth rather than short-sighted speculation.

The myth of market timing

The statistics don’t lie, and while some make it big, others end up losing everything. Trading is often just a step away from gambling, and at the end of the day, the real winner is the casino.

Why timing rarely works

Timing the market may seem appealing to most individuals, even those who wouldn’t consider themselves professional traders. After all, who would like to brag about buying fear or selling euphoria, and most importantly—being right, thus receiving peer approval? The truth is that even experienced traders fail to accurately predict the market all the time. Profiting from the market moves requires a lot of discipline, honesty, and owning up to your mistakes.

The emotional advantage

While regularly buying into the market, the emotions don’t or at least shouldn’t supersede judgment.

Investor psychology

Do you think all the charts you see—the green and red candles—represent price movements? You are, in fact, very wrong. All these patterns, ups and downs—they represent emotions. Investor psychology is what significantly impacts decision-making. Emotions like fear and greed cause irrational decisions that negatively affect their portfolio. Remember, in the end, the market is always right.

The power of discipline

Discipline and patience are powerful assets for every market participant. Sometimes all you need to do is buy Bitcoin and chill. This way you’re focused on accumulating wealth rather than giving in to the price fluctuations.

Historical evidence

Don’t believe me? There is evidence based on past performance showing that investors who search for value outperform the so-called “all in” approach on a long enough time horizon.

The performance of DCA

Historical data strongly supports the effectiveness of DCA. Over multiple market cycles, consistent investors outperform traders. Obviously this doesn’t mean that buying anything regularly will yield a profit, but sticking to well-established players like Bitcoin or Ethereum certainly does increase the chances.

While the market typically tends to appreciate, because of fiat debasement, it’s always good to have cash sitting on the sidelines to “buy the dip” once an opportunity presents itself.

Learning from crypto market cycles

Cryptocurrency markets and any other markets are cyclical. Recognizing that prices fall during bear markets and rise during bull markets certainly helps refine your strategy. While DCAing is about buying regardless of the asset price, doubling down when prices are low and just holding when prices are too high can turn out to be beneficial. Slight modifications to your strategy may actually improve your overall performance. The key is to keep it simple and not overcomplicate things.

Managing volatility

Cryptocurrencies are more volatile than stocks or any other market, but it’s only bad if you don’t have a plan.

Risks of volatility

The volatility in cryptocurrencies is often perceived as a negative because it often leads to short-term losses. This is why timing the market and entering trades during unfavorable times is like begging market makers to take your money. Avoid these costly mistakes at all costs.

Volatility is an opportunity

Instead of thinking about the downside, imagine the upside. You’re in the most volatile and exciting market ever created. Start recognizing volatility as an opportunity and your ally. Staying focused and consistently buying proven coins, especially during capitulation phases, is what differentiates winners from losers. Think about it this way: if everyone has sold and the price is at the bottom, there’s only one direction—up.

A lesson to be learned

There is a lesson to be learned here. As much as everyone would like to have a crystal ball and predict what is going to happen all the time, it’s unreal and delusional. You might occasionally profit from speculation, but it can also be called beginner’s luck. Embrace the slow, steady, and predictable track for better results and see your crypto holdings grow.