Dollar-Cost Averaging
With A Low Time Preference
Bitcoin is a highly volatile and risky asset, but there is one way you can make market volatility work in your favor.
Depending on the day, there can be double-digit losses or double-digit gains. Top cryptocurrencies, bitcoin and ether, both lost 50% respectively in the same span on March 12, “Black Thursday,” only to see them both trading up by more than 15% a week later. The cryptocurrency market is liable to change rapidly and unpredictably. An optimal way to de-risk your investment is by practicing dollar-cost averaging (DCA).
According to Investopedia, DCA is an investment strategy in which an investor allocates the total amount to be invested across recurring purchases of an asset to minimize the impact of volatility on the overall purchase. Regardless of price, you consistently invest at pre-determined intervals.
DCA is not ideal for someone hyper-focused on seeing results in the present, but rather an investor with low time preference. Low time preference places more emphasis than average on their well-being in the distant future. Bitcoin has a low time preference. Saifedean Ammous, author of The Bitcoin…
