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When is the right time to invest in digital currency?

05/04/2017

This week has seen all-time price highs for both Bitcoin & Ethereum. There are often drastic, sudden price changes in digital currency, and whenever the price starts to move there’s never any shortage of “FOMO” around whether it’s the right time to buy or not. As with any kind of investment, this can cause a lot of anxiety, uncertainty, or fear to participate at all.

One of the best strategies I think people can employ is dollar cost averaging, effectively lessening your exposure to price shifts by investing over a longer period of time. It’s pretty simple: think of a dollar amount you’re willing to spend on a regular cadence ($100 a week, for example). On Coinbase we try to make this as simple as possible.

Here’s what setting up a recurring buy looks like…

Buy & Sell interface on Coinbase

Past performance

Obviously mileage varies depending on the asset, and past returns are not indicative of future ones—but let’s take a look back at how this strategy would have performed for the assets we currently support on Coinbase:

What if, 1 year ago, I invested $100 a week in…

Bitcoin

@ $1,582.67 per BTC (chart data here)

Ethereum

@ $86.60 per ETH (chart data here)

Litecoin

@ $23.12 per LTC (chart data here)

Historically, digital currencies have been quite volatile — and will likely remain this way as the ecosystem matures. This strategy is a great way for new participants to get involved without the anxiety of committing a significant amount of capital at a fixed price. Not to mention you also get the added benefit of adjusting this amount up or down as you go.

Over the coming months we’re planning new features that will continue to make it simpler for our users to grow, manage and track their digital currency portfolios. Want to work with us? Join our team.

Note: Coinbase does not recommend any specific investments or investment strategies.


When is the right time to invest in digital currency? was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.