Value Cost Averaging Investment strategy for Bitcoin / Cryptos

[Thelongterminvestor]

On 1st September I started a new strategy for investing in Bitcoin and other cryptos.

The strategy is quite detailed and too long to write down on this forum…but here are the basics:

1. I picked ten different large market cap cryptos to invest in
2. Once a month I invest in each of those ten cryptos
3. Each time I invest, I use a Value Cost Averaging Spreadsheet to buy depending on the price of each crypto on the day.

This means I buy more cryptos when they’re cheap, less when they’re expensive, and sell when they’re super expensive.

Here's the link to the strategy:

https://www.stopsaving.com/blog/my-crypto-investing-strategy

Keen to know what people think of it and how I can improve it?  

[soham]

Value cost averaging is a decade old strategy for the investors and it works well at the hard times. That was primarily used in stock tradings by many investors so that the buy price of a stock is maintained at an optimum low level and so that the profit can be maximized. So it is a very good method to buy a particular crypto in various price ranges and sell it at a higher optimum cost. Even I follow the same in real-world stock investment. Good luck!

[malikusama]

Value cost averaging is a decade old strategy for the investors and it works well at the hard times.

Indeed it is an old strategy, many people in this community are already using it and earning goof profit.
Just a thought, What if we choose more than ten different cryptos having large market cap for this purpose?, say make it 15 or 20 then i think the possibility of  earning good profit will be maximized.

[dothebeats]

I've been using it since I started 3 years ago. Never really complained about the price being high, but just averaged my spendings and thankfully it worked out well. As a guy who earns minimum wage back then, it's too hard to spend money on things that doesn't seem to be an okay investment, but I just gambled it out and bought every week, averaging what I buy and what I can afford. Built a stash and sold it all in April-May 2017. It's a nice strategy for those wanting to get their share fast, too. When everyone else is losing, you can still keep on buying without risking anything large, too.

[Thelongterminvestor]

Good to know people have been using this type of strategy before and that it's worked well for them. I think it's a good way to de-risk in in a highly volatile market like cryptos. VCA works best the more volatile the asset anyway so applying it to cryptos can't be a bad thing.

@malikusama - yes indeed. Definitely a case for adding more and more cryptos to get the diversification benefits. I stuck with 10 to keep the strategy from getting overly difficult to manage. Having spreadsheets to do the maths helps make things a lot easier. Having more coins just means having a bigger spreadsheet - easy to do that - then once the spreadsheet is updated making monthly investments is fairly automated.

I'm busy backtesting how VCA would have worked over the last few years using past data and the results look quite intriguing so far. I'll post those once they are ready!

[Yuhee]

I've been using it since I started 3 years ago. Never really complained about the price being high, but just averaged my spendings and thankfully it worked out well. As a guy who earns minimum wage back then, it's too hard to spend money on things that doesn't seem to be an okay investment, but I just gambled it out and bought every week, averaging what I buy and what I can afford. Built a stash and sold it all in April-May 2017. It's a nice strategy for those wanting to get their share fast, too. When everyone else is losing, you can still keep on buying without risking anything large, too.

This too was my dilemma back when i was still a student. I was not into it at first and hesitant to buy specifically bitcoin at that time because i dont know then how to buy other cryptocurrencies. I did not know the how to make trades and even withdraw them. But at least everything is becoming clear and although i am not using that strategy, i am earning in my own ways. I guess i gonna be using this strategy late then anyone else.

[buwaytress]

First time I've heard a name put against this strategy, am of course not surprised at all it exists, since it's pretty sound against several assumptions that must hold true for your basket of coins:

1. They are relatively stable in terms of long-term value. Yes, it's extremely difficult to say what this is now but for me, I'd look back at 12-months lows and if I'm confident it cannot go below that in the next 12, that's stable enough for crypto.
2. Age. Yes, even Bitcoin has barely made it past 5 years and the lot straggling behind have perhaps 2 or 3 years at best, even less on major volume history.

Since I don't have a fixed income, my only buys are in Bitcoin (and that's really just because I receive it as income) but I try to stagger my sells across the same value-cost average. Within a fixed period of 2-3 weeks, if I feel it is already high enough I sell, or wait out but never past my fixed period. This way I have historically made between 10-15% more in 2017 each sell (ie, getting paid $10 and able to sell for about $11). However, the time between receiving payment and selling is actually 1-2 months. If Bitcoin were to be in a downward trend, I'd lose on the same strategy, but perhaps would mitigate losses.