A recent survey conducted by crypto exchange Kraken has revealed that the majority of crypto investors prefer to use dollar-cost averaging (DCA) as their buying strategy. According to the survey, 83.5% of investors have utilized DCA, with 59% continuing to use it as their primary method of purchasing crypto. The concept of DCA involves purchasing assets at regular intervals, regardless of the current price, in order to minimize the impact of short-term price volatility and eliminate emotional decision-making. The survey found that 46% of respondents believed the biggest advantage of DCA was hedging against market volatility, while around one-third stated that it supported consistent investment habits. Additionally, 12% of participants claimed that DCA helped to remove emotions from their trading activities.
The benefits of a DCA strategy varied based on income levels. Participants earning less than $50,000 identified consistent investment habits as the primary advantage of DCA. On the other hand, those earning over $50,000 saw reducing the impact of market volatility as the greatest benefit. This was particularly evident among respondents earning between $175,000 and $199,000, where nearly 70% believed that minimizing market volatility impact was the most significant advantage of DCA. However, only slightly over 8% of participants maintained their strategy in the face of losses. The researchers noted that investors utilizing alternative investment strategies were more likely to stay committed to their approach during turbulent market conditions. They also highlighted the correlation between income and confidence in sticking to an investment strategy, stating that higher-earning individuals tended to be more confident in their ability to stay the course. In fact, almost 63% of respondents with incomes above $100,000 claimed to have a “very strong” ability to adhere to a trading plan despite market fluctuations.
The survey also discovered that younger investors between the ages of 18 and 29 displayed a preference for riskier strategies, with half of them attempting to time the market. In contrast, older investors over the age of 45 paid closer attention to crypto markets, with two-thirds of them monitoring the markets more frequently than traditional investments, compared to only one-third of respondents aged 18 to 29. The Kraken team acknowledged that DCA is not a flawless strategy but asserted that it can alleviate the stress of market timing and mitigate emotional decision-making.
Overall, the survey conducted by Kraken highlights the popularity of dollar-cost averaging among crypto investors and sheds light on the reasons behind its appeal.