How does encryption investment accumulate wealth? Coin An teaches you 2 stable strategies, so you are not afraid of bull and bear markets!

Binance yesterday published an article on its blog, titled 'The Long Game of Crypto Assets: Strategic Allocation of Digital Assets'. In addition to discussing Dollar Cost Averaging (DCA) and long-term holding (HODLing), it also talked about how to combine the two strategies, as well as practical implementation and investment philosophy.

Dollar Cost Averaging lazy investment method, long-term accumulation of wealth

Cryptocurrency amplifies the volatility of asset prices compared to traditional finance, which is why many people are hesitant to invest in Cryptocurrency. After all, you don't want your hard-earned money to be halved in just a few days. However, Binance believes that there are still opportunities for long-term investment in Cryptocurrency and points out that strategies such as Dollar Cost Averaging (DCA) and HODLing can effectively manage Cryptocurrency investments in the long run.

Dollar Cost Averaging (DCA), also known as lazy investment method or regular fixed amount, is one of the most widely advocated investment methods on the market. Assuming that 100,000 pounds are invested in Bitcoin every month, four coins are purchased at a price of 25,000 in the first month, two coins are purchased at a price of 50,000 in the second month, and one coin is purchased at a price of 100,000 in the third month. At this time, with a cost of 300,000, you would have seven bitcoins, with an average cost of over 40,000. Of course, this is the situation when the price rises, but in practice, DCA can smooth out overall costs and accumulate assets.

Binance summarizes the advantages of DCA, including reducing asset volatility (as we say, the curve is relatively smooth), and DCA does not require advanced trading knowledge and has a lower threshold. Finally, everyone knows that investment is an operation against human nature, and DCA can overcome emotional biases.

Long-term holding of leading and innovative projects, read more chain news to understand the current assets

HODLing is the so-called long-term holding, but this strategy is not suitable for everyone. The most successful value storage for Bitcoin and the first Ethereum to introduce smart contracts are the best spokespersons for HODLing. However, long-term holding may still bring risks, especially for early or low-market-cap tokens. It may be wiser to stop loss early because, from a macro perspective, Bitcoin and Ethereum are still a few successful cases. The key to successful long-term holding is thorough research (read more blockchain news) and a firm belief in the long-term potential of the asset.

The skills of implementing HODLing

Research Basics: If you decide to hold for the long term, choose assets with a strong ecosystem, potential for widespread adoption, and an active developer community. Track its historical performance since its inception to assess whether the asset is worth holding for ten years or longer.

Patience pays off: set long-term goals (at least 3-5 years) and hold firm during market downturns unless the investment thesis changes.

Secure Storage: Storing Cryptocurrency in a cold wallet for maximum security.

Diversification of assets, DCA combined with HODLing

DCA and HODLing can be combined as a strategy. From a macro perspective, long-term investment in cryptocurrency is a psychological challenge. Fear, uncertainty, and doubt (FUD) can lead to panic selling, while fear of missing out (FOMO) can trap investors at high points.

How to Stay Stable:

Focus on long-term goals: Remember the reasons for investing in Crypto Assets. Is it for retirement savings? Investing in future long-term plans? Keep these goals in mind and ignore short-term noise.

Less screen time: Constantly checking prices can exacerbate anxiety. Instead, set specific times for portfolio review, such as monthly or quarterly check-ins.

Celebrating Milestones: Recognizing your own progress. For example, completing a year of continuous DCA is a commendable achievement.

Diversification is also crucial. Do not invest all your funds in a single cryptocurrency. A balanced investment portfolio may include Bitcoin (value storage), Ethereum (smart contracts), and small-cap coins with growth potential, such as $SOL and $XRP.

Although Binance is a centralized exchange, it still emphasizes that platform diversification is key, dispersing assets across multiple exchanges to minimize the probability of a single point of failure. Another aspect is the dispersion between hot wallets (regular use) and cold wallets (asset storage).

Finally, there is hedging technique:

Stablecoin: Allocate a portion of the investment portfolio to stablecoins such as $USDT or $FDUSD to cope with market downturns.

Staking and Liquidity Mining: Earn revenue by staking assets or participating in liquidity mining protocols.

Insurance: Some platforms provide insurance products to prevent exchange hacks or smart contract failures.

【Disclaimer】The market is risky, and investment needs to be cautious. This article does not constitute investment advice and users should consider whether any opinions, opinions or conclusions herein are appropriate for their particular circumstances. Invest accordingly at your own risk.

This article is authorized to be reproduced from: "Chain News"

'How does encryption investment accumulate wealth? Binance teaches you 2 stable strategies to make you fearless in bull and bear markets!' This article was first published in 'encryption city'.