In the past few months, we have seen a massive jump in the price of bitcoin. Though it is the first and oldest cryptocurrency, it is still subject to volatility. And now with Segwit, we can expect that bitcoin will be even more volatile for the coming months until it is locked in and can stabilize.
As bitcoin becomes a more trusted form of payment globally, the overall volatility of this cryptocurrency should continue to decrease.
So now the question becomes, do you think bitcoin is a solid investment? How can you invest by avoiding the crazy spikes in volatility? It is always nice when you get lucky and your investment increases by 10, maybe even 20 percent (depending on the severity of the spike), but what do you do when the market moves against you and suddenly drops?
Several bitcoin-enthusiasts have turned to the dollar-cost averaging method when investing in the cryptocurrency. Dollar-cost averaging is an investment technique, where an individual buys fixed amounts of an asset (in this case, bitcoin) on a regular schedule, regardless of the asset’s price on the “scheduled” purchase date. With this technique, the investor purchases more bitcoins when the price is low and less when the price is high, but it is always for the same currency amount.
Dollar-cost averaging allows investors to be more focused on the long-term investment and less concerned with the daily spikes and drops in the bitcoin value. A long-term, regular investment plan takes emotion and fear out of the equation.
This is one of many approaches people have taken when choosing to invest in bitcoin. It is not a foolproof strategy, so when choosing to invest, it is important to keep an open mind.
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