I recently sold some of the Bitcoin and Ethereum in my portfolio into and moved it into platforms like Nexo, Celsius and BlockFI so they can earn some interest while I wait for a correction to re-enter the market. However now I was faced with a dilemma about what to do if the market remains flat or grows even further during the coming months. I decided to do some research and was even more confused. On one hand I found many experts vouching for the benefits of DCA (dollar cost averaging). In case you are not familiar with DCA it basically means regularly buying crypto with a set amount of $ value and not worrying about the price fluctuations as their motto is “Time IN the market beats TIMING the market”. On the other hand I saw many financial gurus explaining how critical timing the market was and if you buy at a peak and the market crashes it may be ages before you will break even.
I decided to try out an experiment to see for myself which strategy work better and whether my TIMING skills can outperform the DCA results. I plan to track it closely so even if at the end of this experiment I don’t earn any $ at least I would get a good insight about how good or bad I am timing the market.
Why did I choose MONERO?
Bitcoin and Ethereum have always maintained the biggest part of my portfolio and it would have logical to select one of these for this experiment. However I decided to go with some other coin as both BTC and ETH are at their all time high values and there is a high probability they might correct significantly in the near term. Monero is still quite far from it’s previous high of the 2018 bull run. Another key reason is that I have been planning to increase my XMR holding for quite some time now.
I wrote this article sometime back about why I think Monero is one the most fundamentally sound crypto projects out there- https://www.publish0x.com/crypto-projects-sams-reviews/monero-the-true-cryptocurrency-xkygdqr
Another factor is that I am willing to hold Monero for more than 5 years if required as I think privacy coins provide a strong hedge to your portfolio if in the future the governments try to put control or restrictions on cryptocurrencies.
What are the Rules of this Experiment?
· I will spend $1,200 on XMR through DCA and Timing. DCA will be $100 each month for 12 months whereas I can decide when and how much to invest through Timing but I need to spend $1,200 by 31st Jan, 2022.
· I will use two XMR wallets- Exodus for DCA and Atomic for Timing
· At the end of 12 month period I will review if I have some clarity on which approach is better or if I need to stretch the experiment longer
In my current opinion DCA was a safe practice designed for people who do not want to spend anytime analyzing the market moves. So far I always looked at market corrections to enter positions and wait for significant appreciations to book some profits and wait for the next correction.
The recent events have made me realize that there are so many factors that influence the market and many events which you can never imagine (yes, I am referring to tweets by Musk) so I have deiced to keep an open mind about DCA.
This is what the Plan looks like – February 2021!
OK, so as per plan I just went ahead and bought $100 worth of Monero which got me a little over 0.6 XMR. This goes into my Exodus wallet and my Atomic wallet remains empty as according to my Timing strategy I am going to wait for a dip before buying the XMR for that account.
My Prediction on XMR for March 2021!
Everyone seems to be making predictions so why can’t I 😊
I strongly feel the market is going to have a correction towards end of Feb and early March. And if this forecast actually comes true I will buy more through my Timing account for my Atomic wallet. Let’s wait and see how this unfolds.
Cheers,
SamBTC
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