What is a accumulation plan And how does it apply to the world of cryptocurrencies? Also called CHAP, is an investment method that involves accumulating a certain amount at regular time intervals.
The objective of a CAP is to mitigate the risk derived from the expected volatility of the market, achieving an average purchase price.
Considering that cryptocurrencies are quite volatileIt can be risky to invest all of your capital in one go, as this would lead to a single purchase price that, over time, could significantly change its value.
To put it in practical terms, the decision was made to invest $ 100 per month (on the 10th of each month for five months of the current year) in three different cryptocurrencies. Next, we report the values of the three cryptocurrencies on the 10th of the month at a random time of the day.
BTC ETH DGB
- 10/1/20 USD 8,045.00 USD 138.00 USD 0.0055
- 10/2/20 USD 10,081.00 USD 218.00 USD 0.0072
- 10/3/20 USD 8,069.00 USD 198.00 USD 0.0054
- 10/4/20 USD 6,974.00 USD 158.00 USD 0.0065
- 10/5/20 USD 8,521.00 USD 187.00 USD 0.0200
When averaging the purchase value, the average cost is as follows.
- AVERAGE COST OF PURCHASE PER BTC: $ 8,338
- AVERAGE COST OF ETH PURCHASE: $ 179.80
- AVERAGE COST OF PURCHASE PER DGB: $ 0.0089
Analyzing the price as of 05/30/2020 of the three cryptocurrencies in question, the prices are as follows:
- BTC PRICE: $ 9,551
- ETH PRICE: $ 234
- DGB PRICE: $ 0.0177
By comparing our average purchase price with the current value of the cryptocurrency taken into account, we obtain a gross profit of:
- 13% FOR BTC
- 23% FOR ETH
- 50% FOR DGB
Therefore, we invested a total of $ 1,500 over five months in three different cryptocurrencies, resulting in a gross profit of 28.49%, what which equals $ 427.34. (A respectable gain considering the particular moment for the world economy).
In the case of withdrawal of invested funds, it will be necessary to apply the accumulated costs, such as fees and commissions, to obtain the precise value of the net profit.
By doing so, we have drastically reduced volatility by buying the asset at different times at different values, greatly reducing the risk of entering the investment at the wrong time.
Thanks to the flexibility of this type of investment, it is accessible and functional even for savers who do not have large amounts to invest.
The investment simulation data is true and reflects the real value of the assets taken into account.