Post
Topic
Board Speculation
Re: Buy the DIP, and HODL!
by
Hewlet
on 17/08/2024, 07:27:24 UTC
Stacking Bitcoin is of course better using the DCA pattern every week. It is true, as JJG said, that some examples of investors are definitely trapped at peak prices because they buy all at once without following up to continue accumulating every week. Yes, it will delay their investment because they do it all at once. To solve this, it would be a good idea to divide the money we have into several parts in DCA accumulation so that we don't get stuck at one price in the investment we make.

Some of them often assume that their entry is the lowest point, but actually they are wrong because the market can change suddenly, so DCA is the best for finding the lowest price in Bitcoin accumulation. With regular purchases we will also be more active in studying Bitcoin and we will also be more active in managing cash flow for our execution every week.

You are making a very good point and at the same time not being too clear with some of your statement, so perhaps I would like you to clarified me on the aspect you mentioned that DCA is the best way for founding the lowest price of Bitcoin to accumulate or are you perhaps saying the work of DCA is to be identifying every price dip of Bitcoin before an investor can invest?, perhaps if that be the case you are obviously referring to the lump sum strategy because is the strategy that focus on identifying every price dip to take advantage of while DCA method work contrary to that because waiting to accumulate Bitcoin when the price is lower is the last thing a DCA investors will consider because with DCA you don't need the price to move to a certain direction before you can be convinced to accumulate because at any price you  can buy Bitcoin.

The DCA strategy is the best method to use in order to buy at a more lower price but that doesn’t mean that method will give you the lowest price you can buy bitcoin during accumulation. Dip always come when no one expects them, and those dips are more favourable to buy more bitcoin from because it will narrow down your average buy more and your portfolio will immediately increase more in value than it was before. Even when you’ve lump sum and began DCA after that, when a dip comes, don’t hesitate to stack more bitcoin because the opportunity comes only once unlike the DCA that’s readily applicable all the time.

You are right in your explanation by saying we should buy whenever it's dip, but the only impression I want to correct is the aspect you said "dip comes once" dip doesn't come once, it comes as many time as possible but surely it depends on the level of dip you mean, if it's a dip in price of about %20 - %30 them certainly it is rear. But if it's %5 to %10 it is common.
Even though you're opportune to experience different corrections along your investment journey, buying using the DCA method allows you to experience all the different market conditions that come with it. Doing a 4 to 10-year accumulation will certainly expose you to buying at a very low price, a medium price and there are other times when you will have to buy at a much higher price. In the end, after HODling for a long period, the range of prices you consider as DIP prices will have a very slight effect on the overall profitability of your investment because usually for an average investor, the DCA amount is always a bit small such that 5% to 20% dip doesn't make much difference since you're buying with a small DCA amount.

From an infinitesimal point of view, the percentage of DIP matters a lot in building a stronger portfolio but overemphasizing and relying on getting a better percentage of DIP would make you look as though you're timing the market before effecting your buy. It's just best to get this kind of mentality that makes you ignore prices and pay less attention to the extent of DIPs because you aren't ready to sell anytime soon but ready to HODL for the long term.