You decide that you want to invest in crypto and you’ve used our advice to figure out how much cash to put in. Great! The next question is: when do you enter? There are three basic approaches:

  • Wait on the sidelines for a drop and then buy in
  • Buy in immediately
  • Buy in over time by dollar cost averaging (DCA)

In the short-term, whether you’re successful with one approach vs. another depends on luck (despite what you may read elsewhere). If there’s a market crash, waiting wins. If the market goes on an upward tear, buying in immediately wins. If the market trades sideways with frequent dips and rises, DCA wins. No one can predict the future, so we recommend a balanced approach that considers all three scenarios and keeps you focused on the long-term.

First, take an immediate stake

Don’t overthink it; buy your first investment with at least 50-80% of your intended purchase amount. This transforms you from spectator into participant and keeps you off the sidelines, which can be disastrous if we enter a new bull market. With skin in the game, you'll also learn crypto's ins and outs much faster.

With an overall budget of $10,000, let’s put $8,000 in right away.

Second, plan to DCA

Buying crypto once and forgetting about it is viable; you’ll make money as long as the overall crypto market grows in the future. But we also love set-and-forget investing over time, as it lets you accumulate dips and takes the edge off day-to-day movements. Those who bought in 2017 and sold in 2021 made money, but those who bought consistently from 2017 to 2021 made many times more.

Let’s set a monthly auto-buy to acquire $100 of crypto every month for one year. That covers about $1,200 of our $10,000 budget. You might win or lose on this DCA, but the habit of accumulating over time is a good one to make and we hope you’ll keep going forever after the year is up.

Another approach to DCA is to lend out or stake the crypto you own. If you earn 6% APY on your Bitcoin, for example, then that’s equivalent to buying Bitcoin every month. 

Third, create an insurance stack

Put the rest into USDC stablecoin and store on a platform like BlockFi for 8% APY interest and consider that your insurance stack. Invest the interest into more crypto and if the crypto market collapses 50-90%, use some of that insurance stack to increase your holdings. That’s what it’s there for!

Having an insurance stack turns you from prey into a predator. Instead of freaking out that you’re losing money and panic-selling, you’ll see big drops as an opportunity to flex your insurance stack and lower your cost basis. Just make sure to repay the insurance stack if your crypto goes way up.

The insurance stack finishes out our $10,000 budget: $8,000 all at once, $1,200 DCA over a year, and $800 for insurance. You can adjust these percentages to whatever you’re most comfortable with; there’s no right answer, only friendly guidelines.

One final note: there are some people who keep 100% of their portfolio in stablecoins and yield farm or lend it for interest, which they use to acquire crypto. You can expect to get $40-$80 a month worth of crypto with this method; it’s a muchsmaller return, but in theory your principal should be safe.

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