Anyone who has been into Bitcoin (BTC) for a while has likely heard that the right way to go is to forget about short-term trading and instead follow the dollar cost average (DCA) strategy. But what exactly is DCA and what services are there to help you automate the process to unlock the full potential of the powerful Bitcoin DCA strategy?
Source: Adobe / Andrey Popov
The dollar cost averaging strategy
Put simply, dollar cost averaging, or DCA for short, is the process of splitting an investment into a series of smaller purchases spread over time, rather than making an investment of a larger amount at once.
Portfolio value over time of USD 200, invested every 2 weeks, since 3 years ago. Each point represents a purchase. The current portfolio value is USD 89,800. Source: dcaBTC.com
The simple idea behind this concept is that, quite frankly, timing the market is next to impossible for most investors. Spreading the purchases out over a period of time at fixed intervals means that an investor can direct the volatility of an asset for their own benefit.
Sometimes the investor will buy when the price is high, but will also buy when it is low and most other buyers will be too scared to buy. This becomes especially important for a volatile asset like Bitcoin.
And since the whole point of the DCA strategy is to keep buying when the market is scared, the best way to overcome this mental barrier is to automate the purchases so that no manual action is required.
To help you get started on your own DCA journey, we’ve done the research for you and listed some of the popular dedicated auto DCA services for BTC in different regions of the world:
Amber (USA and Australia)
Amber is an Australian fintech company founded in 2017 that is a dedicated DCA service only for Bitcoin. The service is currently only available to residents of the United States and Australia, but the company plans to support additional countries in the future
The main benefit of using Amber is its simplicity and straightforward fee structure. The company has a mobile app that offers recurring bitcoin purchases, and only that.
Amber’s downside is the fairly high 2% fee on Bitcoin purchases for non-paying “Basic” members. On the other hand, customers who opt for a fixed fee of $ 18 per month and thereby qualify for “Amber Black” membership will not be charged any fees for Bitcoin purchases.
In addition, there are charges of between 1.2% and 1.8% for topping up an account with credit cards, but this can be avoided by opting for the free EFT (US Electronic Funds Transfer) deposit option to top up the account instead. decide.
Swan Bitcoin (USA / international)
Swan Bitcoin is headquartered in Los Angeles and primarily serves the US market for bitcoin recurring purchases, although it reportedly supports most other countries as well.
However, the downside for non-US users is that funds must be sent to Swan Bitcoin through international transfers, as the company doesn’t accept credit cards or popular online money transfer services like PayPal and Wise. Unsurprisingly, this can get expensive for many international users.
For US investors, on the other hand, the fees for using Swan Bitcoin are more reasonable and range from 1.19% to 2.29%, depending on the size of the recurring purchase. On top of that, however, the company also charges between 0.99% and 1.49% for depositing funds on the platform, which can increase the total fee up to 3.78%.
River Financial (USA only)
San Francisco-based River Financial is another Bitcoin-only DCA service serving the US market. The service works by the user linking their bank account and then setting up recurring purchases.
Perhaps the best thing about River Financial is the straightforward and low cost of recurring purchase fees. For purchases under $ 200, the company charges a fixed amount between $ 1.19 and $ 2.39. Purchases over $ 200 will be charged a percentage fee ranging from 1.20% for the smallest amounts to 0.64% for the largest amounts.
River Financial also has an iPhone app – but not an Android app – that allows users to track their Bitcoin purchases from their phone.
Bittr is only available in European countries that support SEPA (Single Euro Payments Area). Bittr is a Switzerland-based Bitcoin-only company. The special thing about Bittr is that instead of collecting Bitcoin on its platform, it automatically sends the coins bought on behalf of a customer to the wallet address chosen by the customer.
Since the purchase of Bitcoin is automatic every time Bittr receives funds from a user, a DCA strategy can be implemented by setting up a recurring SEPA payment from the user’s bank account.
The best thing about Bittr is that the onboarding process is easy with very limited Know-Your-Customer (KYC) checks. The fees are also reasonable with a flat fee of 1.5% on every deposit made to the company.
Unlike some other DCA services, Bittr doesn’t support selling Bitcoin to the company. However, since the coins are kept in the user’s own wallet, they can be relatively easily transferred and sold elsewhere.
Much like Bittr, Relai is another Swiss bitcoin company that allows users to set up recurring bank transfers for the company to buy bitcoin. The bitcoins can then be automatically sent to any wallet address, which means that the user can keep their coins entirely on their own.
Again, the main benefit of using Relai is that the app doesn’t ask for any personal information other than the account number from which the money is being sent. The fee for using the service is a flat rate of 3%. Unlike Bittr, however, this fee includes both a service fee to the company and any Bitcoin transaction fees.
Another nice benefit of using Relai is that it allows its users to sell BTC back if they so choose, saving them the hassle of finding other places for their Bitcoin sales.
The global Bitcoin marketplace FastBitcoins.com supports not only traditional flat-rate purchases but also recurring Bitcoin purchases through its auto-buy function.
The advantages of using FastBitcoins.com include the global reach of this service and the fact that purchases with physical cash can be made in addition to bank transfers in selected locations (mainly in Canada, Europe and Australia).
The fees vary depending on the deposit method used, with a 2% fee for bank payments and a 4% fee for cash deposits.
Although the company says it believes that “financial privacy is a fundamental human right,” FastBitcoins.com will nonetheless ask its users to upload copies of identification documents such as passports or driver’s licenses.
Finally, we should also mention that there are several traditional crypto exchanges that also allow users to set up recurring purchases of not just Bitcoin but any crypto asset they want. While these are not dedicated DCA services, they can be a convenient option for those who are already users of these exchanges. These include Binance, Binance.US, Gemini, Coinbase and others.
Please note, however, that the fees may differ from regular spot trading if you use exchanges to DCA via the “buy it now” functions. To make matters worse, exchanges often make it difficult to understand the real costs associated with recurring purchases via instant purchases, which may make the dedicated DCA services listed above a streamlined method for most investors.
Disclaimer: Cryptonews.com does not endorse any of the services listed in this article. We are not responsible for the use of these services. Always do your own research before depositing any money.
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