I think their are investors who are also comfortable buying through lump sum, but if you feel you have some leverage money you could still appreciate buying lump sum and still keep buying through the DCA, at some point you might feel like you’re behind schedule in your bitcoin investment journey and you’ll want to buy through lump sum and front load as well, which will not be a very bad idea.
Lump sum and front load are the same thing.
They are not the same thing.
Front loading can be done in a variety of ways that involve trying to get a stake (or a BIGGER stake) in bitcoin faster than what you might do if you were to follow your regular pace. Not everyone is capable of frontloading without putting themselves into a difficult position, yet if a person is financially strong and even has other investments, it is possible to front load by reallocating the other investments into bitcoin. It is also possible to front load using debt or for example, you could front load by tripling your regular DCA.. so instead of investing $100 per week into bitcoin you increase it to $300.
Lump sum can be a bit of an ambiguous term since it can refer to the receipt of extra money or just having extra money available, and it can also refer to investing a big chunk at once. Some people seem to erroneously consider lump summing as a method of buying the dip.. or even some money that they accumulate for a period of time so that they can strategically strike when the BTC price is low.
Lump sum can be used for front loading, since it is a quick way to get money into bitcoin, but they are still not the same thing.
They're all about buying more quantities of Bitcoin once and it's achievable as long as an investor has a large discretionary income at their disposal. Some investors might lump sum and arrive at their accumulation target immediately or even get to over accumulation phase.
Sure. You are mostly correct in this description, but even if what you are saying is true, it does not make lump sum and front loading the same.
They can now continue holding on a long-term plan to get good profits out of their investment.
There surely can be advantages in terms of investing into bitcoin sooner rather than later, yet price direction is not guaranteed to go up after having had invested in a lump sum kind of a way.
It is true that if bitcoin had dipped a lot then lump sum investing may well have greater chances of getting into and staying in profits, yet even that is not guaranteed. there are some folks who purposefully choose to invest when the price is going up rather than down since they identify that the price is trending up, yet if we are a long term investor, then we might not be served very well with our attempts to try to strategize when the dips might be or not be.. especially if we are in the earliest of stages of investing in bitcoin.
Historically, there surely have been folks who have either lump sum invested (and/or front loaded) their investment at or near the top of the market, which usually is not a good strategy, yet it still can end up working out with bitcoin if the guy has a long term horizon and/or that he continues to invest in bitcoin even after having had established a decently large position early on.
So for example, maybe a guy comes into bitcoin in late 2017 towards the top of the 2017 prices, and if he bought a big chunk near the $19,666 top, he might end up being in the red for several years and the BTC price even went back below that price in 2022 and one time in early 2023... but if he kept investing in 2018, 2019 and 2020, he surely could have had brought his average cost per BTC well below $10k, even if he started to buy at or near the top.
Bitcoin's ongoing upward growth has saved people several times over the years, even though it is not guaranteed to save any of us, yet the longer term investors have done quite well by either just holding through bad periods, yet they have done even better if they continued to buy during periods that their overall holdings were in the red for extended periods of time.
Alternatively, as their holding period progresses, they may yet see the desire to increase their portfolio size and they keep on adding to it to increase their profitability potentials.
Yep. That tends to be the solution in regards to guys who might have had lump sum and/or front loaded their investment, which is to just continue buying, even if the continued buying amounts might have had ended up being much smaller than the original investment.
It is like the situations in which guys blow their whole wadd (or nearly their whole wadd) towards the beginning, yet so far in bitcoin, those who have continued to buy bitcoin, have so far ended up getting bailed out by bitcoin's subsequent price actions, so long as they kept buying and they did not screw up their situation more by either selling and/or trying to trade their way out of their already negative situation.
So yeah BItcoin price within the short term can indeed be unpredictable for when considering the long term, predicting it seems a lot more easier.
I disagree with you that bitcoin price is easy to predict in the long run because nobody knows what Thebes future has fod bitcoin which is the main reason why you are advised to invest with the amount of money that you can afford to lose. Just the way that the price is unpredictable due to Thebes volatile nature of bitcoin is the same in both short term and long-term, if not those early bitcoin hodlers who sold too early when bitcoin price increased to $10k wouldn't sell but should know that bitcoin price will hit $120k in future.
Bitcoin is price increases based on increase in adoption and the halving event but that doesn't mean that you can actually know the exact price that bitcoin will reach in the year 2029. You are advised to invest in the long-term because that's the only way to limit the risk in bitcoin investment because the price increases overtime based on history data since bitcoin is still in her early stage.
Yo mate, I said it’s EASIER (Not Easy) to predict witching the long run, compared to attempting to predict it within the short term. Historically, Bitcoin has been known for its long term growth, and even if it’s true that past performances doesn’t always guarantee future results, but to an extent we can believe beyond reasonable doubt that it’ll most likely continue in that trend within the long term, unlike attempting to predict the price of Bitcoin within the short term, because short term movement has never been in any particular trend, and that’s why I said that it is easier to predict Bitcoin within the long haul, compared to the short term.
Ultimately, most of us are likely investing into bitcoin because we consider that in the long term, the odds for up are greater than the odds for down, yet we still have to be careful not to put everything into bitcoin in case the down scenario ends up playing out, even though we speculate that the odds for up are greater. We could end up being incorrect in our prediction, so we hedge and we try to be careful.
Another thing that we do is choose our position size, so even historically, guys who were quite skeptical of bitcoin still ended up profiting from bitcoin, even if they took a whimpy position, so there are ways that we can choose our position size so that, even if bitcoin ends up going down or going to zero, then the most that we end up losing is 100% of our investment, yet on the other hand, if someone invested into bitcoin in between 2013 and 2016, then he may well would have had been able to get average bitcoin costs to be around $1k per coin or even lower than that... so right now his holdings are 100x of whatever he ended up putting into bitcoin,
so in that case, he should reasonably conclude that if he had put in more then his profits would have had been more, so there are risks in being overly whimpy an there are risks in being overly aggressive since there are guys who were overly aggressive and they end up losing because, they end up having to sell way too much (perhaps even all) of their bitcoin holdings too soon because either they did to manage their cashflow well, or they failed to sufficiently earn money so that they could pay their expenses during the time that they needed to be able to continue to accumulate and/or hold the bitcoin that they had already accumulated.
In other words, there are guys who figured out how to lose money or even to not make money, even though they knew about bitcoin and they involved themselves in bitcoin when BTC prices were much lower.
By the way, I would suggest that DCAing and/or long term investing does not take away risks, yet risks can be mitigated though such approaches that involve position size, and guys still have to figure out how aggressive that they are ready, willing and able to be without over doing it.