There investors that may not want to go in all at once, they may decide to keep some percentage of there discretionary income and them use the remaining percentage for buying the dip. As per being a low coiner ,
As you said, you can decide to buy dips. No one knows when the market price will dip and when it will be high.
Therefore, it is believed that buying through the DCA strategy without allocating some percentage of your discretionary income for dips will be the best option.
I agree with you, but your way of saying these matters is confusing…which in essence you got the idea right, which is just because we do not know if or whether dips will happen, that does not mean that it is a good idea to hold back value for buying dips that could have had otherwise been used to just buy bitcoin regularly.
At the end of the day and investor might not use all of his discretionary income to purchase bitcoin, let's suppose an investor already has around 5 months worth of emergency fund saved up so building an emergency fund is no longer part of their budget on how to spend their discretionary income, the investor could decide to invest as aggressively as 80% of his discretionary income into bitcoin but that begs the question of what to do with the remaining 20%, should that be saved up for buying the DIP? or should all 100% have been poured into bitcoin investment instead, you could decide to save for the dip but what is your guarantee that a dip will be happening any time soon, the point is that no one can really tell when a dip will happen so waiting for it becomes problematic, instead just keep investing with the DCA
Of course how aggressive a person is with his investment is discretionary (meaning within each person's choice). Discretionary income can be used for consumption, investing or savings.. so usually a person will not spend 100% of his discretionary income on investing, even though he is free to do that.
I am not very thrilled with holding back value for buying dips, especially for new investors, yet people can do what they like, and I can imagine situations in which putting some money aside for buying dips would be reasonable for the person... such as if a person had already bought a bunch of bitcoin at a certain price, then maybe he would want to set some money aside for buying dips.
And since dips aren't guaranteed to happen, saving up for it becomes too much of a hassle for any people to handle so it makes more sense to just put the most of it into DCAing and free one's self from unnecessarily having to wait and lose out on alot of good buying opportunities
Let's go by your registration date and say that a person got started buying bitcoin in December 2024, and he had an income of $30k per year, and he was investing $100 per week into bitcoin since December 2024, yet maybe he had also getting more and more excited about bitcoin, and so around June of this year, he decided to take 20% from his various other investments - that he had been investing into for right around 10 years which added up to about $40k, so he was going to take $8k from those other investments and invest it into bitcoin.
So maybe he did all of this in June, and since he already had the ongoing $100 per week investment going on, he had decided that he would invest $5k over the next 5 weeks at $1k per week (which he did between early June and mid July), so then after that he had $3k that he was saving for dips.. So then maybe he had figured out some prices that he would buy on dips for that amount.
Yeah, of course, we can see how anyone could get nervous about holding back so much for buying on dips.. but guys come to various conclusions.. and maybe he would not be requiring a large dip, or maybe he make some adjustments to his plans, and perhaps between June and now he had already used most of it for buying at various points, and he only had $1k remaining in the fund... so yeah, it is not obvious what to do, and some of us might conclude that he is wasting his time trying to wait for dips that may or may not come, even though since June there did end up being a couple of dips that might have had been enough to trigger buys.
In a situation like this with the $8k from other of his already established investments, DCAing the funds like with the $5k over 5 weeks makes a lot of sense since he is relatively new to bitcoin investment (less then a year) but someone in a different situation could decide to put that $5k into lump sum purchase and be done with it, this is riskier as volatility could come into play while DCAing will set the investors mind at relative peace since the DCA method takes volatility into consideration with the money being spread out over 5 weeks rather than just purchase at a go, but depending on the investors choice then either method could definitely work out for him as far as I'm concerned, and also keeping $3k aside for buying potential dips also seems like a good idea even I would have preferred to adding it all to the DCA method and remove the risk of putting himself into any form of psychological stress while looking at for good DIPs to buy from. So while all 3 methods work out in some relatively reasonable ways, I would still prefer DCA>LUMP SUM>DIP
On the other hand, if a guy with similar circumstances had gotten into bitcoin 6 years ago, in mid-2019, and maybe he had started out investing at $100 per week, and then he had a few lump sum amounts come in, and maybe by now, he had a similar situation where he ended up receiving $5k (from inheritance or something like that), so then he has the option to DCA, lump sum (buy right away) or buy on dips. Guys are not going to decide the same way, yet they should at least consider that they have the three buying options (again assuming that his emergency funds/back up funds have been sufficiently built up to cover 4-5 months of expenses).
Experience plays an important role in how a bitcoin investor goes about his investment strategy and 6 years can count as alot of experience in my book, (I definitely don't have 6 years of bitcoin investment experience) $5k extra discretionary fund would be a major boost to his bitcoin investment after already spending potentially around $30k in his 6 years of investment he could decide to put this extra into buying the DIP, but then again dealing with the issue of waiting for a dip to happen can be a hassle so instead the best strategies would be DCA and LUMP SUM, he is already experienced with DCAing, not considering other methods he might or might not have used during those 6 years so choose to spread that $5k though 5 weeks or even 10 weeks would still work out in his favour, he could also decide to lump sum the whole amount right away and increase his stash by $5k worth of bitcoin as soon as possible with the assumption that he already has about 5 months worth of emergency fund on the side then he is quite ready to go with any method that might appeal to him.
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