We get asked this question regularly by clients who are moving funds into Bitcoin but aren’t sure what to do or when, well the simple answer is:
Making a decision on when to buy Bitcoin is a matter of personal choice. Here at The Bitcoin Adviser, we hold dear the libertarian ethos that underpins the Bitcoin community. Our role isn’t to dictate, but to enlighten. We aim to provide you with the tools and insights to make educated decisions tailored to your unique financial situation.
With that said we can provide you with some strategies that you can take in whole or in part, to work out which best suits your preferences.
Before we dive into the strategies it’s always worth considering some of the broader market conditions:
Where are we in the halving cycle?
Are there any positive price catalysts in the near term horizon, like the U.S. spot ETF’s?
What is happening in the macro environment like interest rate direction, money printing and potential credit events?
Where do you think bitcoin is heading in the long term?
The backdrop to this discussion is a query from a prospective client who has $500,000 cash at hand, eyeing a Bitcoin entry point at a $20k-$25k range.
The client is certain about remaining 100% in cash until the desired price point is reached, which is entirely their prerogative but doesn’t come without it’s own set of risks. (What if bitcoin doesn’t head back to $25k? Is bitcoin heading back to $10k, $5k, $1k?).
Here are some buying strategies to consider:
If you're high on risk tolerance and bullish on Bitcoin’s outlook, going all-in immediately could align with your aggressive investment stance. However, be prepared for potential volatility, short term downside but also the opportunity to not miss and short term pumps due to events like the above mentioned ETF’s being approved
2. Dollar Cost Averaging (DCA):
A more conservative strategy is to spread out your investment over time, buying a fixed dollar amount of Bitcoin at regular intervals regardless of price fluctuations. This can help in reducing the impact of volatility and potentially lower the average cost per Bitcoin over time particularly if the price does come down, you don’t get 100% of the benefit of short term pumps but you also average in to any drops in price.
By setting limit orders at various price points, you can automate your buying process and potentially purchase Bitcoin at desired prices. This strategy allows for disciplined buying, helping avoid impulsive decisions driven by market hysteria. Place some orders down at your desired price point in the hope that they hit but also be prepared for that cash to sit un-used should price not hit your target
If you are of the opinion that Bitcoin will hit the $25,000 mark or lower, holding onto your cash and waiting for this price point could be a strategy. However, it comes with the risk of missing out on potential gains should Bitcoin's price surge in the interim.
Getting some skin in the game is always going to ensure you benefit from Bitcoins price gains, there is no one right strategy which is why “You do you!” is so important, it is worth considering the above strategies and finding the mix that best suits your needs.
As one of our Advisers was telling the team he reminisces about going all-in at $1,300, enduring a 30% dip for three months, and thinking he’d made the worst decision, doesn’t look like too bad a decision now does it?
In conclusion, your journey into Bitcoin should resonate with your financial goals, risk appetite, and personal beliefs. The strategies above serve as a compass, not a map. The essence of Bitcoin, after all, is rooted in financial self-sovereignty. So, as you contemplate diving into Bitcoin, remember, the choice is entirely yours. Our mission is to ensure that it’s a well-informed one.
And don't forget, have a conversation with our team about Collaborative Custody, Estate Planning and Asset Protection, to make sure your Bitcoin is under your control and safe from any mishaps!