Bitcoin experienced a hurricane for a few months, crossing the $ 60,000 mark for the first time in March before dropping to nearly $ 30,000 in less than three months.
Volatility, which can be attributed to a variety of factors, including Elon Musk’s tweets and an FBI raid on Russian hackers, has hurt the value of the digital token, which, as it grew at lightning speed, attracted waves of newcomers.
But despite the volatility of the coin, some investors have steadily increased their holdings. This includes Adam Traidman, CEO and co-founder of BRD, a popular crypto wallet with more than 7 million users. Traidman is a veteran of Bitcoin’s massive volatility, which is why he doesn’t try to time the market.
Rather, Traidman uses a more conventional investment strategy: the dollar cost average.
To take advantage of the dollar cost average, invest a fixed amount on a regular basis rather than buying a lump sum all at once. This allows investors to avoid trying to time the market and takes the emotion out of investing.
For Traidman, that means buying a bit of bitcoin every few days, regardless of the current price. This, he says, helps him avoid the psychological stress of buying for $ 60,000, for example, only to see his investment lose 20% of its value in one day.
BRD Wallet CEO Adam Traidman
“Casual investors tend to buy into the hype cycle and sell when the losses hit,” Traidman told CNBC Make It. “It’s crazy to think illogically, but it happens all the time. Why should people be expensive buy and sell low? Well, they don’t want to, but they sell out of fear. “
Although the dollar cost average is typically used for more traditional investments like stocks and index funds, it makes sense to apply it to crypto as well. During its more than 10-year lifespan, Bitcoin has seen several massive price rallies followed by sharp drops. However, each decline has resulted in Bitcoin’s reserve price being higher than it was before the rally.
“Before we did this, we looked at bitcoin prices of $ 8,000, $ 9,000, and $ 10,000,” says Traidman. “Now we’re upset when it’s three times that.”
Before that venture, we looked at bitcoin prices, which were $ 8,000, $ 9,000, $ 10,000. Now we are upset when it is three times that.
CEO, BRD Wallet
Still, Traidman quickly realizes that investing your money in alternative investments like Bitcoin is akin to “professional gambling” and advises people to only invest money they are willing to lose completely.
He views Bitcoin as a long-term investment rather than a way to get rich quick. “I won’t let [the price drop] bother me because I am confident that the price history charts have shown that it will come back in the long run. “
Traidman has a portion of every paycheck converted to Bitcoin, regardless of price, and doesn’t worry about buying up or down on any given day.
“The average dollar cost makes sense in the long run,” he says. “If you contribute a little every time, you have a damn good return in the long term if you survive all the ups and downs.”
Join Now: Get smarter about your money and career with our weekly newsletter
Do not miss: This couple retired at 30 – that’s why they have $ 80,000 in their savings account