DeutschSome investors would probably not use the terms “savings plan” and “Bitcoin” in the same sentence. The volatility of the most important digital currency still seems too high for many investors, which is why speculators tend to use the BTC course for profits. If you take a closer look at the popular classic stock market and the products traded there, such as ETFs (exchange-traded funds), these are by no means without risk. And overall, it is no longer unrealistic that more and more people will soon add a Bitcoin savings plan to their portfolios. The so-called “cost average effect” reveals exciting opportunities in this context for the steady purchase of further Bitcoin units – without having to enter the market directly with large sums.
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Bitcoin Can also Lead Savers to Good Returns
The aforementioned effect illustrates in the objective analysis that Bitcoin is, strictly speaking, an invitation to buy at any time. This at least protects the nerves and, with the necessary tact, can lead to the hoped-for positive return target with comparatively little effort thanks to the cost average effect. However, a challenge for beginners in this context is the various conceptual peculiarities in crypto terminology. As an interested party, you first have to acquire these in order to follow the reporting and safely lead a Bitcoin savings plan into the future in a meaningful way. Good nerves are undoubtedly still needed, especially at the beginning, saving with Bitcoin will regularly provide a certain thrill. The reason is the mentioned fluctuation range of the crypto courses, i.e. the volatility.
Nevertheless, with a few important tips, you can set up a practical Bitcoin savings plan and even manage it cheaply thanks to the cost average effect and without further professional guidance.
Reasons for a Bitcoin Savings Plan
Higher risk appetite due to fear of missing out on opportunities
In many cases, the trigger for major losses and problems when investing in the crypto sector is the almost always irrational fear of missing important opportunities. There is now the abbreviation FOMO for such knee-jerk reactions when investing, which in English stands for “Fear of Missing out”. Overlooking a profitable new trend and getting in or out too late – for many Bitcoin investors, this is the worst possible scenario. However, the consequences of this fear are repeatedly emerging on the global crypto market. The price broke out acutely and massively upwards in recent years, similar to the end of 2017, and secured one record high after another.
Many investors reacted with ill-considered high investments, on which they are still proverbially sitting today. This is also referred to as “Bags”, i.e. bags in which expensively purchased altcoins from the aforementioned market phase are kept. Instead of getting in when prices have risen significantly and hoping for further profits, waiting would have been the better decision back then. In this way, some performance dramas could possibly have been avoided.
The search for the right buying and selling moment
Instead of jumping on the bandwagon, the motto “buy the dip” would have been the better motto. This is about making additional purchases for the Bitcoin savings plan when the crash has started. And there are always such moments on the market. Many investors have neglected this approach for too long, but the good experiences of successful traders at the end of 2018 speak for themselves. Anyone who entered at an overpriced rate in 2017 was able to compensate for the previous losses in a short time about a year later thanks to the cost average effect. Because by then the Bitcoin price had collapsed into the range between 3,000 and 3,500 US dollars. On average, a lot looks less bad or even positive with some distance.
Own emotional world can lead to wrong investment decisions
Nevertheless, there will always be investors who are incorrigible and listen too much to their emotions. From a purely economic point of view, however, feelings are usually bad advisors. In addition, of course, the large movements of the course for the Bitcoin savings plan are not recognizable far in advance.
The tip from savings plan professionals is: Any time is the right time to invest in the Bitcoin savings plan!
A popular misconception that also survives on the classic investment market is the classification of savings plans to the corresponding target group. Savings plans still have the reputation of not being suitable for young investors. But this assessment is outdated. Rather, many investment professionals see the Bitcoin savings plan as one of the most important instruments in terms of performance optimization. The analysis situation is somewhat different for altcoins, but here the focus is on the savings plan on the BTC anyway. The Bitcoin suitability results as expected from its age. In the meantime, it is clear that Bitcoin is not a temporary phenomenon, while many altcoins still have to prove themselves. So the (Bitcoin) savings plan has left its image as an old-fashioned investment model behind, it can be a good choice as a gradual direct purchase.
Providers for Bitcoin savings plans are, for example, the crypto exchange Bitpanda and Coinbase.
Precise Course Analyses Remain a Problem with Cryptocurrencies
Because of its simplicity, a strategy can be effectively implemented here. In other areas of the financial market, investors have been trusting this approach for decades for good reason. The theoretical and ultimately also practical knowledge states that without exception every price curve has waves – sometimes to a small extent, sometimes very clearly and pronounced. You can take advantage of this if you don’t constantly wait for the one big moment to get in. Rather buy the amount of Bitcoin units that fits your budget at regular intervals. Savings plan friends get their money’s worth, even if the Bitcoin (BTC) price experienced a positive or negative correction in between.
The Difficulty of Predicting Course Developments Accurately
This strategic approach is also worthwhile because the prediction of the Bitcoin future, despite all the experience from around ten years, is ultimately more of a kind of coffee grounds reading. The history of the currency is not yet sufficient to formulate pinpoint analyses. And, to be honest: Even if technical analysis sometimes leads to success with the help of longer-term price charts for stocks, this is due to the volatility of cryptocurrencies for the time being rather unrealistic. Experts also find it difficult to define a time for a possible next all-time high – even with the realistic level of the guaranteed coming all-time high, opinions could hardly be further apart.
Bitcoin Savings Plan Appeals Primarily to those Interested in the Long Term
Some experts expect a preliminary high point at 50,000 USD, other experts (for example the media-savvy John McAfee) consider prices in the high six-figure range to be possible. With all understandable interest, predictions are speculations and no guarantee. This leads in the context of the cost average effect, which will be analyzed in more detail below, that purchases for the Bitcoin savings plan require appropriate planning instead of hasty, ill-considered transactions. Rely on supposedly “safe” forecasts. Here, the own trader type decides significantly how to invest. The daily time required for trading and independent analysis is a fundamental element. Three central questions can be summarized beyond time management before the possible start of a Bitcoin savings plan:
- Can I imagine as an investor to permanently rely on Bitcoin?
- Am I convinced that the BTC deserves the title “digital gold”?
- Do I really stand behind the decentralized currencies and the Blockchain system?
Anyone who answers these questions with yes is most likely at the right address with the Bitcoin savings plan. We would like to distance ourselves from statements such as “earn money in your sleep”, but Bitcoin savings plans based on the cost average effect are a much more relaxed model than many other asset classes – and that in the long term. Less stress and less time in one, so to speak. Many results are absolutely convincing. It is important to define the budget exactly and stick to it when buying Bitcoin. Self-control is always useful during the investment period. Since Bitcoin is the most stable digital currency to date, savings plan results are best “verifiable” here. True to the motto “make old new”, because as I said, savings plans are generally not an innovation. The bridge to the crypto world is the new thing.
Possible Environments for Trading with Cost Average Effect
1. Bitcoin savings plan in the recognizable bear market
Anyone who invested 1,000 USD in BTC in the environment of a bear market at the beginning of 2018 would still have the equivalent of 900 USD of capital today as a result of the current developments. The waiver of the one-time deposit for the benefit of ten 100-USD monthly installments via the Cost Average strategy in the comparison period temporarily won 0.5 BTC, not to mention the increase in value when converted into US dollars taking into account the average prices at the moment of the individual purchases. “All-In” cut here so much worse. Not to forget: Investors are less stressed and emotionally burdened in the long term. The risk also turns out better in relation to the return than with a complete investment.
2. Savings plan use in the bullish market
An investor invested 1,000 USD in BTC on time for the new year 2017. The investment was clearly worthwhile. A token cost almost 970 USD at the time. At the end of June 2019, the almost 1.03 BTC acquired with the budget would have been worth more than 12,800 USD. A profitable business. Anyone who invested the 1,000 USD in ten monthly installments would have been worse off on the bull market in the comparison period – nevertheless, the theoretical portfolio at the end of the first half of 2019 would be worth almost 7,000 USD with a stock of just under 0.560 BTC. Keep in mind that both results were convincing; however, the savings plan on Bitcoin basis would have been associated with less nervous strain in the turbulent times!
Better Result in the Bear Market for the BTC Savings Plan
The comparison shows that the Bitcoin savings plan with cost average effect works better when it is used in a bear market. One-time investments, in turn, are more convincing when analyses show a bull market. The dilemma for all investors who want to collect maximum returns: When which phase dominates the market is only partially predictable even for investors of the first hour. Especially since flowing transitions can also occur, which send out wrong signals despite some supposedly clear indications. Especially when it comes to the end of a current market, it can sometimes go very quickly. One-off larger investments are therefore always more risky. Meanwhile, the Bitcoin savings plan is likely to be crowned with success in the long term due to the increasing acceptance of the currency in the real world.
Those who like it Quiet and Relaxed Prefer the Savings Plan
The fact that there are moments in which the all-in variant brings significantly more return is correct. Las but not least, however, it should be pointed out again what distinguishes the savings plan on the BTC course and the strategy Cost Average. If the course breaks in, you can remain noticeably more relaxed due to the long-term planning than with an acute decline, which can quickly cost investors a large part of the portfolio value compared to the time of purchase. In relation to the average purchase price, however, the minus often hurts much less. And the aspect of nervous strain in the life of an investor should always be included in the evaluation. The longing – better greed – for ever higher profits also plays a role when I have literally tasted blood after a cheap purchase.
Here it is more difficult to find a sensible moment for a sale. Less risk with still good yields? With a Bitcoin savings plan, this can succeed over the years. Without excessive stress, but with a clear goal in mind. In addition, investors can consistently rethink said goals and correct them if necessary. So it is not about short-term decisions, which can always lead to disappointment early on.
The editors recommend:
The trading platforms for digital currencies in Europe (based in Vienna) - specializing in trading Bitcoin, Ethereum, and many other cryptocurrencies, also offers a free wallet.
Payment options
Pro
- Very good security concept
- Easy to use and register
- German-speaking customer service
- Savings plans available
- PayPal in DE and AT
- Other assets such as metals available
- Provider from the EU
Contra
- Trading fees
- Fewer currencies tradable
96%
5.0 out of 5.0 stars
Sehr gut
Verified provider
Long-standing expertise
Transparent selection
Regulated platform
