Post
Topic
Board Speculation
Merits 2 from 1 user
Re: Buy the DIP, and HODL!
by
Obim34
on 05/02/2024, 23:15:27 UTC
⭐ Merited by Dr.Bitcoin_Strange (2)
IMO your right about DCA beign the best strategy for accumulating bitcoin, but for you to stay it is clearly more profitable than lump sum or any other strategy in terms of accumulation might not be totally right, cause I also believe that other strategies if we'll practiced can give good results too, just that DCA has better advantages for beginners than others.

In terms of DCA you might end up buying bitcoin for a higher price if the price continues to soar as you buy and accumulating less than someone who buys only on dips or lump sum, I'm not saying that any strategy is better than another here.

Lest assume this senerio that, Mr A uses DCA uses DCA to accumulate bitcoin as his only strategy and he has an income of 2500$ and decides to allocate 10% to buying bitcoin weekly, so he buys at the first week at a price of 45,000$ and second week at 50,000, third week at 55,000$ and finally at 50,00$, he ends up buying at an average price of 50,000$ and accumulates a total of 0.05 bitcoin for his first month for an uptrend market.

Let say the same allocation with an down trend market of 49,000$, 45,000$, 40,000$ and 39,000$ price at each buying interval, he ends up accumulating a total 0.0578 bitcoin at an average price of 43,250.

What I'm saying is that the DCA strategy does not always favour you in all market trends, but you have to worry less about fluctuations and market volatility since you are buying for the long term hold.
DCA is perfect but a little more stressful than any other strategy, with the consistent purchasing of Bitcoin at designated periods of time. DCAing Is very much profitable not just alone base on a crafted illustration than using the lump sum method.

Sometimes we misinterpret the lump sum method and the term Buy the DIP and Hold. Lump sum pattern deals with accumulation of Bitcoin for future profits, basically a higher long term holding than any other strategy and without undermining the purchasing price because it is certain for the price to keep appreciating due to increase in demand over the approaching years. Meanwhile buying the DIP means holding funds and always monitoring the market till when the price drops far below the last ATH, just like when the price of Bitcoin dropped to $20k most investors who had enough money took the perfect opportunity and bought at that price, we can see even now they are actually on profits but considering we are expecting a new time high very soon it will be ridiculous to sell now instead we should aspire to continue holding.

According to your illustration, lumps sum involves a one time huge purchase, so considering if the price begins to DIP he is left with no funds to continue purchasing unlike when doing DCAing. If Mr A is DCAing and instead of price depreciating it keeps appreciating then the investor should be aware of a longer time holding but with no certainty the market often goes both ways, an uptrend and downtrend always creating the most perfect entry price.