When is the right time to invest in digital currency?

This week has seen all-time price highs for both Bitcoin & Ethereum. There are often drastic, sudden price changes in digital currency, and whenever the price starts to move there’s never any shortage of “FOMO” around whether it’s the right time to buy or not. As with any kind of investment, this can cause a lot of anxiety, uncertainty, or fear to participate at all.

One of the best strategies I think people can employ is dollar cost averaging, effectively lessening your exposure to price shifts by investing over a longer period of time. It’s pretty simple: think of a dollar amount you’re willing to spend on a regular cadence ($100 a week, for example). On Coinbase we try to make this as simple as possible.

Here’s what setting up a recurring buy looks like…

Past performance

Obviously mileage varies depending on the asset, and past returns are not indicative of future ones—but let’s take a look back at how this strategy would have performed for the assets we currently support on Coinbase:

What if, 1 year ago, I invested $100 a week in…

Bitcoin

Ethereum

Litecoin

Historically, digital currencies have been quite volatile — and will likely remain this way as the ecosystem matures. This strategy is a great way for new participants to get involved without the anxiety of committing a significant amount of capital at a fixed price. Not to mention you also get the added benefit of adjusting this amount up or down as you go.

Over the coming months we’re planning new features that will continue to make it simpler for our users to grow, manage and track their digital currency portfolios.