Originally published on: October 09, 2024
A recent survey conducted by crypto exchange Kraken revealed that a majority of crypto investors, around 83.5%, prefer using the dollar-cost averaging (DCA) strategy when buying into the market. With 59% still sticking to this strategy as their primary way of investing in crypto, it’s clear that DCA has gained popularity among punters in the crypto space.
Dollar-cost averaging involves buying assets at regular intervals regardless of the current market price. This method is believed to help reduce the impact of short-term price volatility and eliminate emotions that can cloud judgment when making investment decisions.
According to the survey of 1,109 crypto investors conducted by Kraken, over 46% of respondents cited hedging against market volatility as the biggest advantage of DCA. Additionally, around a third of investors believe that DCA helps maintain consistent investment habits, while 12% stated that it removes emotion from trading, allowing for more rational decision-making.
Income levels also play a role in how investors perceive the benefits of the DCA strategy. Respondents earning less than $50,000 highlighted the encouragement of consistent investment habits as the primary advantage of DCA. On the other hand, those earning over $50,000 emphasized the reduction of market volatility impact as the key benefit, especially among higher-income earners.
The survey also found that higher-income investors are more likely to stick to their investment strategy during market turbulence, with almost 63% of those earning over $100,000 stating a strong ability to maintain their trading plan in the face of market fluctuations.
Interestingly, younger investors aged between 18 and 29 tend to prefer riskier strategies like timing the market, while older investors over 45 pay closer attention to crypto markets and check them more frequently than traditional investments.
While DCA is not a foolproof strategy, Kraken’s team believes it can help reduce the stress of trying to time the market and prevent emotional decision-making. By adopting a disciplined approach to investing through dollar-cost averaging, crypto punters can potentially navigate market volatility more effectively and make more informed investment decisions.
