Cryptocurrency investing has blown up in terms of popularity throughout the past few years, especially when we saw some of the largest cryptocurrencies, such as Bitcoin (BTC) and Ethereum (ETH), blow up in value.
Furthermore, with the introduction and rapid growth of Decentralized Finance (DeFi) as well as Non-Fungible tokens (NFTs), there has never been such a high influx of new Decentralized Applications (dApps) that are aiming to capitalize on top of the crypto industry.
As such, all of this represents one of the most appealing points in time to actually get into cryptocurrency investments, which has led many investors to question when to properly time their entry into the space and when to buy all cryptocurrencies from that point onward.
Today, we are going to go over everything you need to know when it comes to buying cryptocurrencies, so you can have a higher level of knowledge as well as a heightened perspective as to when to buy each coin or token; so let's dive in.
Picking the Perfect Time to Start Investing in Cryptocurrencies
Many cryptocurrencies experience daily price volatility and can jump in value hundreds if not thousands of dollars in terms of value even within 12-hour intervals.
While volatility can cause uncertainty, it can also cause fear of missing out, and with prices being as volatile as they are, many cryptocurrency investors are always analyzing and learning about new ways through which they can implement strategies to get the most out of the crypto space.
The goal of each investor and trader is simple, and this goal is to essentially buy the cryptocurrency while its value is low and sell it at a later point in time when the value has increased. However, this is much easier to say than to actually execute in the real world.
So, instead of trying to time the market, which is almost impossible to do due to the unpredictability surrounding cryptocurrencies, investors will typically opt-in to utilize an investment strategy.
Creating a Strategy and Scheduling Your Purchases
Today, we are going to go over one of the most popular cryptocurrency trading strategies that have proven efficient in the past, known as the dollar-cost averaging (DCA) strategy.
If you are curious what is dollar cost averaging in crypto, this is a strategy utilized by numerous investors as a means of reducing the impact of market volatility, and this is enabled due to the fact that it allows investors to buy cryptocurrencies in a creative way. Let's go over how all of it works.
DCA is a long-term strategy where an investor essentially buys a smaller amount of a cryptocurrency throughout a prolonged time frame, no matter the price of that specific cryptocurrency at that point in time.
You can think of it this way: instead of buying Bitcoin for a lump sum of $20,000, you can buy it 20 months in a row for $1,000 each; this way, you would buy Bitcoin at different prices and ride out a lot of volatility as a result.
Furthermore, you are not risking your entire budget this way. As a result of this, DCA as a strategy can aid investors when it comes to providing them with a safe entry into the market. If the investor in question thinks the price is about to go down but will likely recover in the long-term, they can use the DCA strategy as a means of investing their money into the cryptocurrency over the period of time where they think the downward momentum will take place.
So if you want to buy Bitcoin and other crypto currencies, you can utilize the dollar cost average crypto strategy, where you would gain DCA Bitcoin for example.
Furthermore, this is a rule-based approach to investing, which can prevent emotional trading, where investors might let their psychological state dictate their actions and panic-sell cryptocurrencies at a lower price point, only to realize later on that they have received in value.
Today, investors do not need to manually do the DCA strategy, as tools such as ZenDCA can contribute to the automation of this process.
By leveraging the power on offer by ZenDCA, investors can utilize the "Repeat Buys" and "Automatic Withdrawals" menus, but you also have "Buy Schedules" and "Withdrawal Schedules" to essentially implement the DCA strategy with ease and let it get executed without much user input.
Where to Buy Cryptocurrencies
Today, there are numerous cryptocurrency brokerages as well as exchanges that will provide each investor or trader with the opportunity to which they can gain access to Bitcoin (BTC), Ethereum (ETH), or any other cryptocurrency.
However, some of the best exchanges that you can buy cryptocurrencies on and utilize the DCA strategy through ZenDCA include Binance.US, Coinbase Pro, FTX.US, and Gemini. These exchanges represent the best way to buy bitcoin or other cryptocurrencies, and will even let each investor buy Bitcoin instantly.
How to Store Your Bought Cryptocurrencies Properly
Once you buy your cryptocurrencies and want to hold onto them for a prolonged period of time, you will need a suitable solution that will avoid your wallet potentially getting hacked or compromised by hackers or bad actors.
While each online cryptocurrency exchange will feature its own hot wallet storage, which will allow you to directly store your cryptocurrencies on an exchange, these are always connected to the internet and, as a result of this, will always be prone to attacks from remote hackers.
The best way through which you can store your cryptocurrencies securely is through the usage of hardware storage devices, as through them, you will be able to disconnect the wallet from the internet.
Some of the best wallets that you can get today and store your cryptocurrencies securely for prolonged periods of time include the Ledger Nano X and the Trezor Model T wallets.
Investors can even automatically schedule when withdrawals are made from the on-exchange wallet to their private storage device. Make sure to create a free account and try out ZenDCA today.
Moving Forward With Cryptocurrency Investments
We have gone over everything you need to know when it comes to picking the best strategy for investing in crypto. By utilizing the DCA strategy, you will never have to worry about picking the correct time and can always have exposure to the cryptocurrencies you are interested in, both in times when they are extremely low in value and when they spike up in value, ultimately leading to a balanced out portfolio.
Make sure to safely store your cryptocurrencies, so at the point in time when they get up in value, you will find them in your account and can transfer them in an on-exchange wallet to sell them at a potential profit.