Cryptocurrency Dollar-Cost Averaging Plan#
About Dollar-Cost Averaging#
In 2021, I started my own dollar-cost averaging plan based on the reference of Zhu Anbang's plan. Before this, I had always been concerned about depositing money and only focused on mining. I had never made any serious investments or used any trading methods. During the bull market in 2020, I didn't make much money and even incurred losses due to reckless trading in the second half of the bull market. After seeing Anbang's post, I considered following his dollar-cost averaging method.
Dollar-Cost Averaging Strategy#
Refer to Zhu Anbang's article "Buy and Hold for Thirty Years" for detailed daily dollar-cost averaging returns and market data on his website. If interested, you can refer to it.
In his dollar-cost averaging strategy, he had the idea of dollar-cost averaging the top 100 coins by market capitalization multiple times. Although I don't invest as much as he does, I have also invested in many of the same coins as him. The reality is that some of them have shrunk by 90% or even gone to zero. He himself has acknowledged that this should not be done. For dollar-cost averaging, it is better to choose coins with high market capitalization and long-term consensus.
Due to my limited funds, I also refer to the Ahr999 coin accumulation index and the sentiment index. If the sentiment index shows extreme greed when BTC reaches $60,000 USD for the second time, I will sell based on intuition, even if it's a small amount, so that I won't regret it later.
Dollar-Cost Averaging Method#
After the FTX incident, I recommend using exchanges with large scale and high consensus for trading. If conditions permit, consider using cold wallets and transfer funds when the on-chain gas fees (transaction fees) are low.
The exchange I highly recommend is Binance: Click here to register on Binance or enter the referral ID: 47678597
Alternatively, you can use OKEX: Click here to register on OKEX or enter the referral ID: 7nqx4
Cold wallet: Ledger - https://shop.ledger.com/zh-CN?referral_code=4CAT5T1CRK0Z2
Thank you.
Dollar-Cost Averaging Amount#
If you are confident in cryptocurrencies and consider them as investments rather than speculation, meaning you believe in their long-term development and that the entire industry will not go to zero, then you should increase your dollar-cost averaging when prices are low and decrease it when prices are high to reduce emotional interference. It sounds easy, but when BTC is really at $20,000, ETH is at $1,500, and SOL is at $10, it is indeed difficult to increase investments. Therefore, in this wave, many people have earned less. Most people regret buying after losing money in investments and regret buying too little after prices rise.
For example, if we dollar-cost average $600 per month, we can divide it into several portions, such as 3 portions of $200 each, and evenly purchase BTC, ETH, and BNB. Alternatively, if you have confidence in SOL, you can replace BNB, etc. It's up to you to decide. When the coin accumulation index and greed index are both high, you can reduce the dollar-cost averaging amount, for example, from $600 to $300. If there are projects you have more confidence in, you can allocate more portions to them. However, it is best to choose targets with long-term potential that you believe in and are willing to hold for a long time. If you don't want to make a choice, it's still better to buy BTC.
Dollar-Cost Averaging Records#
For overall records, you can directly use an Excel spreadsheet to write down how much you invest each month, how much you have already invested, etc.
For specific profit calculations, I recommend two websites for record-keeping:
You can use their apps to record your transactions for each coin and easily track your overall profits.
Special Topic#
Monthly dollar-cost averaging articles will be written in the following topic: Cryptocurrency Dollar-Cost Averaging Topic