Although Bitcoin has recorded a new all-time high, recent analyses indicate that retail investors have not yet returned to the market. However, positive signals from the current market suggest that a wave of retail investment could soon be triggered. But is this a good opportunity to start investing in Bitcoin when the price has reached six figures? Experts are offering many conflicting opinions on this issue.
Should we start DCAing Bitcoin now?
One of the popular strategies that retail investors use when entering the crypto market is the dollar-cost averaging (DCA) method. According to Bitbo's calculations, if a retail investor invested $1,000 each month into Bitcoin over the past two years, they would have accumulated approximately 0.4588 BTC, yielding a return of 114.8%. This figure demonstrates that Bitcoin remains an attractive asset for long-term investors, despite past market volatility.
Nevertheless, the question arises whether the DCA strategy is still effective when Bitcoin has surpassed a value of $100,000? This becomes clearer when an investor named Steve, who openly admits he is not a Bitcoin enthusiast, decides to invest $1,000 each month into Bitcoin throughout Donald Trump's presidency. Steve's decision may reflect a renewed interest from retail investors in Bitcoin, especially at such high prices.
Expert assessment: Is now the time to buy?
Jake Claver, CEO of Digital Ascension Group, argues that implementing the DCA strategy at this moment may not be a wise decision. He believes we are currently at a 'cyclical peak' and there could be another 10% drop before the next bear market emerges. According to him, the DCA strategy should only be applied when the market is at the bottom, rather than at the peak.
"Exiting Bitcoin has already begun. Buying any cryptocurrency other than BTC would be a better choice before the Altcoin season," Jake Claver asserts.
Contrary to Claver's view, Udi Wertheimer, a prominent investor in the crypto community, believes that the decision not to buy Bitcoin when it reached $120,000 could be a major mistake.
"The most costly mistake you can make is refusing to buy Bitcoin at $120,000 just because you sold it at $30,000. My friends and I sold all our Bitcoin at $100 and only started buying back at $500-$1,000. Do you think we lost sleep over this? Do whatever it takes to get rid of that mindset."
With Wertheimer's advice, he emphasizes that in investing, what matters is not the price at the time of purchase but the acceptance of past mistakes and persistence with a long-term strategy.
Is this the 'Final Dance' before the peak?
Data from CryptoQuant provides an optimistic outlook on Bitcoin's future.
According to a recent analysis by Joohyun Ryu on this platform, Bitcoin has not yet entered the euphoric phase characteristic of past market peaks. Instead, he suggests that we might be at the beginning of a phase he calls the 'final dance' – a phase of strong growth before Bitcoin reaches new highs.
Ryu's perspective is supported by the 'greed' index, which is currently at a moderate level, much lower than its peak in 2021. He also points out that the rHODL ratio, an important indicator of long-term holding behavior, is currently only at 32%. This is a signal that retail investors, often referred to as 'shrimp', are still quite hesitant to enter the market, and their capital flow has not been as strong as in truly euphoric periods in history.
"A typical example is that the rHODL ratio is currently at 32%. This index reflects the asset allocation and behavior of different investors. In truly euphoric phases, we often see a large influx of capital from individual investors, which has not yet clearly occurred," Joohyun Ryu explains.
Debates surrounding the DCA strategy into Bitcoin at high prices indicate that the current market is polarized between cautious investors and opportunists. Some believe that Bitcoin is at a cyclical peak and the market may be preparing to enter a downturn. Conversely, others argue that this is just the beginning of a strong growth cycle, and investing in Bitcoin now could yield significant profits in the future.
Only time will tell whether the strategy of investors like Steve will succeed, but one thing is certain: the volatility of the cryptocurrency market will continue to attract the attention of investors worldwide. While some remain wary of the cyclical peak, others are willing to take risks to seize growth opportunities.