According to a survey conducted by crypto exchange Kraken, the majority of crypto investors prefer to use dollar-cost averaging (DCA) when buying into the market. The survey, which included responses from 1,109 investors, revealed that 83.5% of participants had used a DCA strategy, with 59% still using it as their primary method of buying crypto.
Dollar-cost averaging involves purchasing an asset at regular intervals, regardless of its price. This approach is believed to reduce the impact of short-term price volatility and eliminate emotional decision-making. Over 46% of respondents cited hedging against market volatility as the biggest advantage of DCA, while around a third believed it supported consistent investment habits. Additionally, 12% of participants stated that DCA helped remove emotions from trading.
The benefits of a DCA strategy varied depending on income levels. Participants earning less than $50,000 highlighted the encouragement of consistent investment habits as the biggest advantage. On the other hand, those earning over $50,000 considered reducing the impact of market volatility to be a greater benefit. This was particularly true for respondents earning between $175,000 and $199,000, where nearly 70% believed that reducing market volatility impact was the most significant advantage of DCA.
Interestingly, only slightly over 8% of respondents continued with their DCA strategy when facing losses. The researchers noted that investors using other investment strategies were more likely to stay committed during market turbulence. They also observed that higher-income investors displayed more confidence in sticking to their investment strategy. In fact, almost 63% of individuals earning over $100,000 stated that they had a “very strong” ability to adhere to a trading plan despite market fluctuations.
The survey also revealed that younger investors between the ages of 18 and 29 preferred riskier strategies, with half of them attempting to time the market. In contrast, older investors aged over 45 paid closer attention to crypto markets, with two-thirds of them checking the markets more frequently compared to traditional investments.
The Kraken team acknowledged that DCA is not a perfect strategy but argued that it can help reduce the stress of timing the market and mitigate emotional decision-making.