For those who have invested in crypto before or will make it for the first time, the most important issue is timing. Especially popular cryptocurrencies, especially Bitcoin, fluctuate from time to time and this confuses the investor. So when is the best time to invest in cryptocurrencies?
The daily price volatility in cryptocurrencies, like any investment, can cause uncertainty and fear of being overlooked. According to the standard trading logic, it is bought when the price is low and sold when the price is high. However, this generalization is often not correct. Therefore, it is easy to say but difficult to do, even for experts.
Rather than trying to “get the market in line”, many investors use a tried-and-true strategy of average dollar cost (ODM). It reduces the course of market volatility by regularly investing a small amount in an asset such as cryptocurrencies, stocks or gold.
ODM may be the right choice for certain investments to gain long-term value (or forecast increase) and experience price volatility as they reach that point.
What is ODM?
ODM is a long-term investment strategy in which an investor buys an asset in small chunks over a period of time regardless of price (for example, investing $100 in Bitcoin each month for a year instead of investing $1,200 at once). But although it is a popular method of buying Bitcoin, it is not a strategy with cryptocurrencies.
An ODM can help an investor safely launch, start taking advantage of long-term price growth, and help results by averaging the risks of short-term downside price movements. So, when should ODM be used?
If the cryptocurrency market trader thinks that prices are about to drop but that long-term prices are likely to rebound, he uses the ODM strategy to invest his money during the timeframe when he thinks the downside move will happen. If his prediction turns out to be correct, he will benefit from collecting the assets at a lower price. But even if the forecast turns out to be wrong, he has already invested while the price is rising.
ODM exposes investors to different prices over time. The goal of this strategy is to block by averaging the series or declines in an investor’s portfolio when widespread price fluctuations occur, and to take some advantage of price action in both directions.
Average dollar costs limit your potential risks to avoid potential losses. Functioning as a potentially safer option for investors, this strategy aims to protect your portfolio from the serious blows of price volatility in the short term.
To understand if ODM is the right strategy for you, it’s important to consider your specific investment conditions. It is always best to consult a professional finance professional before adopting a new investment strategy.
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