The notion that time in the market is more important than timing the market holds true, especially in the world of cryptocurrencies. According to an analysis by crypto research company Ecoinometrics, the difference in monthly returns between bullish and bearish markets is insignificant. This suggests that investors are better off placing their bets on Bitcoin and Ethereum whenever it suits them best. Both Bitcoin and Ethereum have shown similar price performances over the years, regardless of whether they are in positive or negative markets, with the exception of Ethereum’s initial bull market after its launch in 2015.
Nick, the founder of Ecoinometrics, believes that timing the market is a futile endeavor due to the uncertainty present in financial markets. However, he acknowledges that adjusting investment strategies based on market conditions does make sense. Ecoinometrics follows a tactical approach to investing, taking into account long-term macro cycles and market liquidity conditions when deciding to buy. William Cai, co-partner of Wilshire Phoenix, also emphasizes the difficulty of consistently outperforming the market through market timing. Given the relative newness of crypto assets, he believes that a long-term view and investment horizon are more appropriate.
Successful investors have often criticized those who try to predict the exact moment to buy or sell an asset. Instead, they advocate for a consistent investment approach known as dollar cost averaging (DCA). DCA involves regularly investing a fixed dollar amount into an asset, regardless of its price at a given time. This approach removes concerns about price volatility and establishes a systematic approach to accumulation. Oliver Veliz, a professional trader with extensive experience, has been practicing dollar cost averaging in traditional markets since 1981 and has continued this strategy for Bitcoin since 2020. By eliminating price concerns and volatility, DCA becomes a powerful and “magical” strategy.
