If you own Bitcoin or talk about it often, chances are you’re getting a lot of similar questions – especially during Bitcoin bull markets. They can come from your best friends or your coworkers. “Should I buy Bitcoin now? Is it a good time to buy Bitcoin? Is this a good price to buy Bitcoin?“
Does any of it sound familiar? In this article, we will look into the most accurate answers to those questions, so don’t go anywhere.
Should You Buy Bitcoin Now?
All of the above questions relate to buying Bitcoin, but they are relevant to all other investments, too. If you decide to buy Bitcoin, you should know why and when to do it.
Investors should carefully examine all of their investments, especially those as speculative, volatile, and highly risky as Bitcoin. These days, most people hold Bitcoin rather than use it as a payment method.
So, what is it that makes Bitcoin unique? Who controls BTC and its value? How many bitcoins are there, and how many will there ever be? Why was Bitcoin invented? And how does one store Bitcoin and other cryptocurrencies?
If you don’t know how to answer one or more of the above questions, you should start conducting some serious research on what Bitcoin is. You can start with us on our blog. We publish some pretty decent stuff.
Bitcoin as an Investment: Read This Before You Buy
The first thing to know about Bitcoin and other cryptocurrencies is that they are speculative investments. If stocks and equities are considered the riskiest of all traditional investments, then Bitcoin constitutes its own category of risk, and guess what?
An asset whose price spikes 2,000% in the year 2017 and plunges 70% the following year is pretty risky. The same can be said about BTC’s price from March 2020 (the COVID crash) until the top reached in November 2021 – it spiked from below $4K to over $69K in a matter of 20 months. And then, it crashed by over 50% in the following two months.
Therefore, you should always consider both scenarios when investing, particularly the worst-case possibility. With Bitcoin, this scenario is that it goes to zero.
Before making a decision, you should be absolutely certain that you can tolerate that kind of risk. If losing 90% of your initial investment sounds like too much for you – consider reducing the amount you intend to buy.
Bitcoin: To Zero or $1 Million
In light of the above – there are many predictions about Bitcoin’s price. On the bullish spectrum – there are some who believe that it will reach $1 million in 10-20 years from now. Ask yourself – do you want your kids to ask you why you didn’t buy BTC when it was affordable? Do you want to be out of this investment?
On the bearish spectrum – some investors believe that it’s going to $0 and completely refute all of Bitcoin’s merits. Are you willing to risk your investment?
If, after all of this, you’re convinced that you want to buy, let’s explore the best way to do so.
DCA: The Best Way to Buy Bitcoin
You are not a magician who knows when to buy and when to sell. Neither am I. In other words, we can’t time the market. For that reason, wise men invented the DCA method.
Dollar Cost Averaging (DCA) is an accumulation strategy in which you divide your total desired purchase amount into equal-sized portions at regular time intervals. This can be once a week, once a month, once a quarter, or whatever is best for you.
The main advantage of using this method is that you will be less worried about the buying price than you otherwise would be. DCA is perfect for long-term investments and highly recommended for volatile assets such as Bitcoin since one’s purchase price is averaged over time.
Another advantage of this method is that it is very suitable for ongoing investment, such as investing a small portion of one’s salary every month. The nice thing about Bitcoin is that, unlike stocks and equities, it can be bought for any amount of fiat currency. There are enough satoshis (0.00000001 Bitcoin) for everyone, and there is no minimum purchase requirement.
Disadvantage
The disadvantage of the DCA method is that one’s profit is not maximized in bull market conditions. However, throughout history, there have been many periods during which DCAing in the US stock market yielded a higher profit than a lump sum (once) investment. The same argument could be made for DCAing into Bitcoin.
Another potential disadvantage is the persistence required to consistently purchase a fixed amount of Bitcoin over time, even if you feel low and it’s very tempting to buy a larger amount or vice versa.
But to put it into perspective, if you’d bought as little as $1 worth of Bitcoin every day for the past nine years, you would have invested a total of $3,288 in BTC, which is currently worth around $78K.
Source | dcaBTC
Of course, that may seem a bit too good to be true because BTC traded a lot lower nine years ago. So, let’s have a look at some more realistic examples:
Examples
Meet Joe. Joe has a net monthly salary of $5,000. Let’s imagine that he’s decided to invest 5% of this in Bitcoin once a month since he first heard about it three years ago – in November 2021. Doing this for three years would have meant that Joe invested a total of $9,000, which would now be worth $18,450, just about doubling his money.
Source | dcaBTC
But if he had started doing so five years ago, he would have invested $15,000, which would currently be worth about $46,000 – a return of more than 200%.
Source | dcaBTC
Both results demonstrate a considerable return despite the fact that Bitcoin’s price crashed by more than 50% from its all-time high in November 2021.
Of course, it’s also possible for your investment to be underwater (losing) at certain periods of time. However, the DCA strategy is beneficial in such events as well because you will have a close average to the current price.
This, naturally, doesn’t account for black swan events where the price of an asset crashes by (for example) 50% in a day – nobody can be consistently prepared for this. But even if it happens, if you keep buying under the DCA strategy, your average entry will reduce as well, putting your buying price closer to the current price.
The moral of this story is that the earlier you adopt a DCA strategy, the higher your ROI, as the risk of buying at a relatively high price (like in April or November 2021) is minimized over time. DCA allows one to average down their purchase price.
Final Thoughts
We explore, we learn, and we grow. By understanding the potential of Bitcoin and the benefits of dollar-cost averaging (DCA), you take the first step toward a disciplined investment journey. Bitcoin’s limited supply has led many to believe in its long-term growth, but no one can guarantee the perfect moment to buy. That’s why DCA stands out. It balances the unpredictability of the market with a steady, long-term approach.
Start by doing your own research (DYOR). Dive into insightful resources at blog.millionero.com. When you’re confident, you can begin your DCA journey into Bitcoin or explore other tokens on millionero.com. Your journey of discovery today can shape your investments for tomorrow.