Should I buy 1 bitcoin directly or should I gradually trade up by starting in small amounts?

I would like to introduce you to a term called Dollar Cost Averaging (DCA). It means that you invest a fixed amount of money on a regular basis (periodically) in something. This will help you to buy more when the price is less and helps you bring down the average cost per unit quantity.

Let’s get this with the help of an example:

Assume that Bitcoin is trading at $ 3,400 (random number) today and that you have $ 3400 exactly in your account.

Scenario 1:

You decide to buy bitcoin at this price as it seems to be increasing over the past few days. So, for the amount you invested, you got 1 Bitcoin.

But like every other stock or a security, the Bitcoin market also behaves cyclically (repeats cycles). Assume again that the Bitcoin price starts decreasing from the next day and it comes down to $ 3,200 afer a few days. You will be unhappy about your investment. Consider the alternate way to invest below.

Scenario 2:

You buy bitcoins worth $ 1,700 when the price is at $ 3,400 to get half a bitcoin. Again, after a week or two, you buy using another $ 1,700 left with you when the price is $ 3,200. You would now have 0.500 + 0.531 = 1.031 bitcoins instead of 1 (which is good considering the price of bitcoin and that it is bought till the 8th decimal place) . If you repeat this way further, the average cost might still come down.

This is just an illustration. The price might increase as you would have expected after buying it at $ 3,400 but then over time, if you continue buying it using a fixed amount, the average will most likely come down.

Hope this helps.

Thanks !!