Experts Analyze Ethereum's DCA Investment Strategy Amid Crypto Market Recovery
Date: 2023-09-20 Author: Dima Zakharov Categories: BLOCKCHAIN
Understanding DCA Strategy
For reference, the DCA system involves redistributing investments by investing funds at specific time intervals and equal monetary portions, regardless of the market price of the underlying asset. This approach is quite popular among novice investors as it allows them to minimize the impact of the high volatility of digital coins.
Key Drawbacks
However, despite its strengths, this strategy has some significant drawbacks. It relies on the underlying assumption that the long-term value of the asset will always increase. However, it does not take into account the period of long-term downward trends, which is currently observed in the cryptocurrency market.
Representatives from Finbold noted that if an investor had applied DCA to Ether since the beginning of this year, they would have an unrealized loss of 4.76% at the current moment. Interestingly, in the case of Bitcoin, this approach would have yielded a profit of 5.69% since the beginning of the year. Currently, the leading altcoin is trading at $1627, having lost about 1.2% in price over the last 24 hours. Over the past week, Ether's price has decreased by 2.62%.
It is worth noting that many experts view Ethereum's global prospects positively. Ernst & Young, for instance, concluded that ETH will absorb the entire blockchain sector over the next decade.
