DISCLAIMER: The below references opinions and is for informational purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.

Over the past week, the overall “market cap” of cryptocurrencies fell approximately $110,000,000,000. This resulted in many people eating large losses on their holdings. For people who got in at the start of January, they’re probably seeing most of their holdings in the red. Some people have been inclined to panic sell, what the crypto community calls “weak hands” while others see this as a great time to buy at a discount. Crypto sees fairly frequent, fairly large dips. We saw one in November of 2017, two right after in December, and we’re in the midst of a relatively long downturn in January.

In other markets, losing 14% is pretty big news. A lot of holders have seen coins dip 20, 30, or 40% in a week. Elsewhere, this would be considered a crash or disastrous news. In crypto, it is unfortunately common. Because December brought in a lot of new people to crypto communities, and because this is the first time many of these new members have invested money, it helps to understand how to overcome moments like this in a market. Dollar cost averaging is an investment strategy where, through regularly scheduled investment and reinvestment, an investor minimizes the impact that market volatility has on their holdings. An example would be putting $100 into your coin of choice on the first of each month. It makes your investment strategy easy, rote, and completely unaffected by momentary hype, FOMO, and shilling.

“We continue to make more money when snoring than when active.” — Warren Buffett

Timing the market so that you “buy the dips” sounds appealing but is in practice difficult. Some analogize it to catching falling knives. The best investor is an apathetic and passive investor. Naturally, one should still do their research and determine what they think a fair price to buy in and sell out at might be, but an investor should not sit with money on hand in the hopes of putting money in at exactly (or roughly) the right time to get in at the bottom of the market.

For example, if someone believes REQ is a good buy at $0.80 because they think it should be worth $3.00, they should not hope to catch it at $0.60. Instead, they should put their money in at regularly scheduled intervals so long as the price of REQ is still below the $3.00 mark. Yes, this means that sometimes you buy at $0.80 and it dips to $0.70 the next day. But it also means that sometimes you buy at $0.65. The idea isn’t that you worry about what happens the next day; the idea is that you minimize your exposure in this incredibly volatile market. When you have holdings with entry points at $0.65, $0.70, and $0.95, you mitigate the losses you’d take if you had went all in at $0.95 while increasing the long term gains you can expect. Suddenly, your heavy bags for buying in at an all time high are a lot lighter because you realize the profits on your entries below that price.

To be clear, dollar cost averaging is not an optimum investment strategy. If you have reason to believe the market will go up within a reasonable period of time, then it makes sense to push all your money in as soon as possible so that you do not sacrifice future gains. If you have sufficient liquidity to take advantage of huge drops as they occur, then dollar cost averaging is not the best strategy for you. That said, dollar cost averaging is a sound strategy for those who cannot afford to put in a lump sum of money all at once, who cannot determine what the market might do, or who cannot stomach the constant booms and crashes in crypto. Instead of asking, “Is now the right time to buy XLM,” or “Will XLM be 5x next month,” ask yourself, “Will having XLM be profitable six months from now if I buy today?” It’s about time in the market, not timing the market.