Dollar-Cost Averaging Crypto: How To Invest Automatically

February 10, 2022
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dollar cost averaging dca

Dollar-cost averaging (DCA) is a well-known investing method that many investors have used. By taking advantage of market drops while avoiding putting too much money into an investment at any given moment, taking a DCA approach to digital assets will allow you to take advantage of the crypto market’s volatility while also limiting your losses.

By using a cryptocurrency exchange, you’ll also have an easier and safer time purchasing digital assets to dollar-cost average them into your portfolio. For this purpose, we suggest using CoinSmart, which has the lowest trading fees among all crypto exchanges in Canada.

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What Is Dollar-Cost Averaging?

Dollar-cost averaging (DCA) is an investing strategy that involves putting little amounts of money at a time rather than all at once. It’s a technique that has been utilized by many people, and the objective of this method is to take advantage of market falls while avoiding putting too much money in the market at any one moment.

By investing gradually and consistently, DCA attempts to counteract our natural urge to want everything all at once. Using this strategy might save you the trouble of attempting to figure out the stock market’s best prices in case you’re not a seasoned market watcher.

Dollar-cost averaging can also help your investments survive the negative effects of short-term market volatility. In fact, if the price of an asset drops when you begin using dollar-cost averaging, you may profit from said drop if it rebounds later.

How Does Dollar-Cost Averaging Work?

To start applying dollar-cost averaging into your investments, you first choose the prospects you’ll invest in (whether that’s stocks, cryptocurrency, or commodities). After that, you’ll then have to choose the total amount of money you’d like to invest.

Once you’ve decided on these two things, you’ll start investing your funds in smaller, equal amounts over a certain length of time rather than all at once. Typically, you would place your DCA trades manually, but there are certain dividend reinvestment plans and 401(k)s that can take care of it for you as well.

Even if the market drops or the prices of your assets change, your transactions will continue to run automatically after you’ve fully set up the settings of the plan.

Dollar-cost averaging entails putting money into an investment on a regular basis, even if the market or a specific asset has depreciated in value. It also implies that, at some point, you’ll be investing when there’s a market sell-off, which is when there’s a large number of assets that are sold in a brief period of time.

Some investors may be hesitant to buy equities during bear markets (markets where the price is dropping). However, there’s a silver lining to this situation: buying when the market is down allows you to acquire potentially lucrative assets at bargain prices, even if they weren’t in your DCA plan originally.

Dollar-cost averaging allows you to benefit from buying low and selling high by purchasing when others are ready to sell. 

Can You Do Dollar-Cost Averaging With Cryptocurrencies?

Dollar-cost averaging is pretty similar to placing a recurring buy order on a cryptocurrency exchange. Cryptocurrencies are susceptible to significant price swings, even more than stocks, but dollar-cost averaging reduces the danger of investing in them.

Buying at dips and selling at the top might produce a greater return, and DCA is widely considered to be a safer long-term investing strategy than lump sum buying and selling. It has a lower chance of paying off, but it also has a far lower risk involved.

With the wild fluctuations that characterizes the crypto market and the promise decentralized finance shows in terms of future development, digital assets has been and may continue to be a lucrative prospect for your investment portfolio. If you want a relatively safe way of benefiting from crypto’s volatility, a dollar-cost averaging strategy will certainly be worth your time.

Top 3 Crypto Exchanges In Canada

Applying a dollar-cost averaging strategy to cryptocurrencies is already pretty simple, but by using a cryptocurrency exchange, you can make the process even easier by trading fiat currencies for digital assets.

There are a number of exchanges to choose from, but here are our top 3 choices for the best crypto exchanges to use in Canada:

1. CoinSmart

CoinSmart: best crypto exchange Canada

CoinSmart is a great option for Canadians seeking a reliable, trustworthy crypto exchange. CoinSmart’s trading fees are just 0.2%, they offer excellent customer support available 24/7 via phone, live chat and email, and user accounts are verified instantly.

CoinSmart has been designated a Registered Marketplace by the Ontario Securities Commission (OSC), which means they’re a highly secure exchange. They also maintain a 95% cold storage policy, which keeps your crypto extra safe across all circumstances.

As a new CoinSmart user, you’ll receive a $50 bonus upon funding your account, which you can use to buy Bitcoin, Ethereum, or any of the 16 assets CoinSmart supports. If you’re looking for a highly secure, reputable exchange, CoinSmart is an excellent choice.

Features

  • Extremely low trading fees (0.20%)
  • 24/7 customer support available via phone, live chat or email
  • Instant account verification
  • Supports 16 cryptocurrencies
  • Registered Marketplace by the OSC
  • Trade all altcoins directly
  • Immediate deposits and withdrawals
  • User-friendly for both beginners and advanced traders
  • 95% cold storage policy keeps your crypto extra secure

Cost

  • Account Opening: Free
  • Trading Fees: 0.20%
  • INTERAC Deposit: 0%
  • Bank Wire Deposit: 0%
  • Bank Wire Withdrawal: 1.00%
  • EFT Withdrawal: 1.00%

Signup Bonus

$50 bonus when you sign up using this link

Best For

Investors looking for top-level security and instant account verification.

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Offer ends May 19.

2. Bitbuy

Bitbuy’s trading fees are an impressive 0.20%, and just 0.1% for Pro users. It supports 17 cryptocurrencies, verifies accounts instantly, prides itself on its helpful customer service reps, and has a beautiful, well-rated app.

For a limited time, Bitbuy is offering a $50 bonus to new users who fund their account with $250 or more.

You can fund your Bitbuy account directly from your bank account via INTERAC e-transfer or bank wire, with all account deposits and withdrawals executed quickly. It’s processed more than $4 billion in trades across its 350,000+ Canadian users.

Bitbuy is a Registered Marketplace and Investment Dealer, as recognized by the Ontario Securities Commission (OSC). This means that the OSC has recognized Bitbuy as a highly safe and secure exchange, and that it offers deep liquidity for all order sizes.

If you’re looking for a highly-respected exchange that offers altcoin trading, excellent customer service, and a slick mobile app, Bitbuy is for you.

Features

  • Extremely low trading fees (0.10% – 0.20%)
  • Easy to use for both beginners and advanced traders
  • Supports 17 cryptocurrencies
  • Excellent customer support
  • Powerful mobile app (rated 4.6/5 on the App Store)
  • 99% cold storage policy keeps your crypto extra secure

Cost

  • Account Opening: Free
  • Express Trading Fees: 0.20%
  • Pro Trading Fees: 0.10% to 0.20%
  • INTERAC Deposits/Withdrawals: 1.50%
  • Bank Wire Deposit: 0.50%
  • Bank Wire Withdrawal: 1.00%

Signup Bonus

$50 when you deposit $250 using this link.

Best For

Investors looking to trade with extremely low trading fees.

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Free account, instant verification

3. Crypto.com

Crypto.com: best crypto exchange Canada

Crypto.com is a major global player that brings a mature, proven exchange to Canadian crypto investors. It supports 100+ cryptocurrencies, making it an ideal fit for anyone looking to invest in undiscovered altcoins before the masses.

Crypto.com offers some unique features that no other Canadian cryptocurrency exchanges can match. Users can trade options and futures contracts, earn interest by staking their coins, and make trades with up to 10x leverage when they feel particularly confident in a coin.

Crypto.com also has invested an enormous amount of money into its platform security, which makes trading with them extremely safe. The exchange is lightning quick (prices update dozens of times per second), which gives day traders an upper hand over the rest of the market.

Overall, Crypto.com is a solid exchange for investors looking to cash in on brand new altcoins. If you’re just looking to buy more mainstream coins like Bitcoin and Ethereum, though, I suggest either Bitbuy or CoinSmart instead.

Features

  • Average trading fees (0.4%)
  • Supports 100+ cryptocurrencies
  • Allows up to 10x leverage
  • Trade crypto derivatives (futures and options contracts)
  • Earn daily interest by staking your coins
  • Purchase newly-listed coins at up to 50% off
  • Free deposits from all cryptocurrencies

Cost

  • Account Opening: Free
  • Trading Fees: 0.4%

Best For

Investors looking to buy altcoins and other new crypto assets before they go mainstream.

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Extremely secure, 10x leverage

In Summary

Dollar-cost averaging (DCA) is a well-known investing technique that has been utilized by many investors. By taking advantage of market falls while avoiding putting too much money in at once, applying a DCA strategy to crypto assets is a good idea for those who want to take advantage of the crypto market’s volatility while also avoiding the risk of losing it all in one big investment.

Cryptocurrency exchanges make it easy for investors to dollar-cost average cryptocurrencies into their portfolios by buying a fixed number of digital assets at predetermined intervals. For this purpose, we recommend that you use CoinSmart, which has the lowest trading fees across all crypto exchanges in Canada.

The Best Crypto Exchanges In Canada

Best Overall

Supports: 16 cryptocurrencies
Security: 95% cold storage
Trading fees: 0.2%

$50 bonus ends May 19.

★★★★★

Rated 4.9/5

Lowest Fees

Supports: 17 cryptocurrencies
Security: 95% cold storage
Trading fees: 0.1% - 0.2%

Free account, instant verification

★★★★★

Rated 4.8/5

Best For Altcoins

Trading fees: 0.4%
Security: 95% cold storage
Signup bonus: $10

Trade with 10x leverage.

★★★★

Rated 4.2/5