According to the investor survey conducted by the cryptocurrency exchange Kraken, the majority of cryptocurrency investors accumulate by following the same strategy. It is debatable how well the survey covers all market participants and how consistent it is, but it is useful for those who have not heard of this strategy to know.
Dollar Cost Averaging Strategy
According to the survey, 59% of respondents use a dollar cost averaging (DCA) strategy to invest in crypto assets. DCA is the practice of investing regularly, regardless of price, without market timing.
Kraken notes that DCA offers a “set it and forget it” method of accumulating crypto over time. This strategy has become popular to reduce the impact of short-term price fluctuations and eliminate emotions that can cloud investment decisions.
According to the survey results, 83.53% of crypto investors have used the DCA method and 59% have adopted DCA as their primary investment strategy. Participants noted that DCA protects against market volatility, eliminates emotion in investing, and encourages stable investment habits. This is more like participating in any asset-based private pension system and purchasing regular monthly funds. It can even be said literally. For example, if you have a Gold-based individual retirement account, the amount you specify will be deducted from your account every month. You can watch BES accumulate savings for you, regardless of price, to use in 10-20 years. In crypto, this is a little riskier because some altcoins increase 10-100 times in a few years while others go to zero.
Strategy by Income Level
Kraken also noted that investors with annual incomes of more than $100,000 are more confident in their investment strategies and are less likely to change their strategies compared to lower-income investors.
Low-income investors surveyed tend to prefer market timing over the DCA routine. This suggests that low-income investors may be more at risk from trading losses due to their lower capital reserves and disposable income.
«Higher income traders have a stronger ability to stick to their trading plan in the face of market fluctuations.» -Kraken.
Data for 2022 revealed that only 78% of those earning income between $25,000-49,999 could cover their monthly expenses, while this rate was 94% for those earning over $100,000.
These findings show how investors’ income levels affect their investment strategies and how different income groups react to market fluctuations.
Choosing the appropriate strategy for investors plays a critical role in ensuring their financial security. Dollar cost averaging stands out as an effective method for stable savings.
Disclaimer: The information contained in this article does not constitute investment advice. Investors should be aware that crypto currencies carry high volatility and therefore risk, and should carry out their transactions in line with their own research.
