Profitable Bitcoin Traders. With the recent level of the weighted average cost of purchased Bitcoin, all investors who have regularly dollar-cost averaged into the leading cryptocurrency are ahead of the curve, regardless of the time they have held. This announcement is made even though the USD price of Bitcoin has fallen more than 50% from its all-time high of over $69,000.
Regularly buying an asset at the same fixed dollar amount is known as dollar-cost-averaging (or DCA for short). The underlying principle is that volatility can be reduced by extending the period between buy orders. There will be a pricing differential between the execution of some purchases and others. This approach can be very attractive for assets like Bitcoin, which has a reputation for extreme volatility.
Despite this, several industry financial analysts continue to believe that Bitcoin—whose current market cap is about $600 billion and an entire existence of BTC $57,831—is built on a Ponzi scheme. Still, others insist that putting money away in the most difficult currency ever devised is a terrible investment idea that has failed miserably thus far.
Bitcoin Outperforms Traditional Investments
“We assert that Bitcoin’s long-term risk-reward ratio is currently the most favorable of any liquid investment in the world,” says investor Adamant Research, who has been pointing out Profitable Bitcoin Traders risk/reward ratio for many years. We anticipate it will trade between $3,000 and $6,500, and a new bull market will begin. The same organization made similar claims when the markets were down in 2011 and 2015.
Many conventional investments, such as real estate, gold, or a portfolio with 60% stocks and 40% bonds, have performed much worse than DCA ing into Bitcoin. As one might expect, there is little to no comparison between the success of a DCA approach in Bitcoin and that of any other asset.
To diversify or not?
One of the rules that traditional asset managers usually follow is the idea of rebalancing. Following this school of thought, one should transfer the gains from an underperforming asset to one doing better. Diversification “on the go” is one way to put it. According to investor Michael Saylor, “selling the winner to buy the losers” would be the simplest way to put it.
The BTC/USD pair increased 376% in the past five years, compared to the S&P 500 or gold, which both have returns of around 55%. A portfolio’s potential would have been severely diminished if profits were taken from Bitcoin at any point in time and invested in other assets. Except for individuals managing assets worth several million dollars, income from dividends is not covered. The capital gains from a large Bitcoin stake would outweigh the income, even if that were the case.
Although “risk” is usually connected with uncertainty and possible negative outcomes, what about the dangers of “playing it safe?” Inflation has become a major threat in recent years, and some say investors should be worried that their portfolios can’t keep up with it.
Macro Trends to Consider
Bitcoin (BTC) advocates and DCA method backers have long said that BTC is the best protection against monetary inflation and general market volatility. This story has succeeded despite the best efforts of its detractors.
Consider the 2023 financial crisis and the subsequent surge in Bitcoin’s value as evidence. Also, in 2022, when Bitcoin’s price dropped dramatically from its all-time high, the phrase “so much for an inflation hedge” was all the rage, yet by 2023, the concept had mysteriously faded. “Money printer goes brrr” is one of the most well-known crypto memes about printing money. Meme creator Jerome Powell was shown at a printing press, spitting out newly printed US dollars.
Profitable Bitcoin Traders: Truthfully, the M2 money supply expansion has always been strongly tied to the price of BTC/USD, which is a major factor in the meme’s success. Despite recent trends in a shrinking money supply and velocity, there is still reason to conclude that quantitative easing (QE, commonly called money printing) is not in effect anymore. It is more probable that it just rests for a while.
Slow and Steady Wins the Race
No amount of proof can sway the opinions of Bitcoin and crypto skeptics. According to them, a Ponzi scheme is a Ponzi scam. However, hodlers have swallowed the truth pill and are enjoying the just rewards. Bitcoin advocates can rally others behind the cause, but no one has the right to impose their ideology on others, regardless of how obvious that opinion is now.
Bitcoin is up 87% so far this year. However, it is still 44% lower than the all-time high of $69,000. The next halving, planned for May 2024, will take place in less than a year. Many believe that Bitcoin’s price might soar into the six figures and beyond during this cycle after this event, thanks to increased institutional adoption that is expected shortly.
