Applying a Dollar Cost Average (DCA) method can be smart for investors looking to profit from the crypto markets. Yesterday’s trade session witnessed a brilliant price recovery from Bitcoin after it reclaimed the $30,000 level, pushing some Altcoins to the upside.
While the bulls basked in the glory of their supposed win and retaliation, BTC Bears decided to drop the ball again in today’s trade session with a slightly over 3% drop.
Several Altcoins, including Ethereum, have recorded losses as BTC struggles in price, trading slightly above the $29,000 price region. While market sentiments may fluctuate, employing a dollar-cost average strategy can be the close-to-perfect strategy to profit from these BTC rallies.
Applying A DCA Strategy To Bitcoin
Bitcoin started 2023 on a good note as it has produced four consecutive monthly green candles and a rally that broke past $30,000 for the first time since June 2022.
However, a Forbes report called for a $10,000 Bitcoin price prediction in the first quarter of 2023. Crypto investors who took the call and waited missed out on Bitcoin’s rally or had to buy at higher entry points. This is why DCA strategies are necessary not to miss out on future price bottoms and asset rallies.
Dollar-cost averaging (DCA) is an investment strategy smart investors use to buy into an asset using a fixed amount of capital at different time intervals.
Regardless of market ups and downs movements, this strategy is utilized and employed by investors to profit from potential price bottoms and rallies in the future. As a case study, Bitcoin is a popular digital asset and cryptocurrency known for its high price volatility and movements in the crypto and financial markets.
Right from its creation as a cryptocurrency, it has experienced multiple bear and bull cycles which commonly sees it trading at high peaks (bull markets) and lows (bear market).
Every trader wishes to accurately time these bottoms and peaks and take profitable trade actions, but this is almost impossible, as it were unless a DCA strategy is applied.
Crypto Investors Are Still Greedy
Bitcoin’s fear and greed index still shows that while a retracement is seen in the price of Bitcoin today, investors are still greedy.
A report shows that the current greed level for BTC at $29,274 is at 63, which is a relatively high amount of greed among crypto investors.
This indicates that investors are still buying BTC at the current price for which it is trading. On the flip side, a general rule of thumb is that extreme greed could indicate a possible price retracement, while extreme fear presents buy opportunities in the markets. At the time of writing, Bitcoin is seen trading at $29,163.
BTCUSD| Source: BTCUSD on TradingView