Binance has shared its perspective on two key strategies for crypto investing: dollar cost averaging and HODLing.
The advice, published on the company blogaims to guide investors through the volatile cryptocurrency market with a focus on long-term success.
According to Binance, dollar cost averaging automatically includes a deposit set amount at regular intervalsregardless of market prices. This strategy helps investors reduce the impact of market volatility by spreading purchases over time.
For example, an investor allocates $200 per month to Bitcoin (BTC) buys fewer units when prices are high and more when they are low, averaging the total cost. Binance recommended the automatic process through features offered by crypto exchanges, making it a manual way to accumulate assets over time.
HODLing
HODLing, a term that originated as a typo of “hold,” refers to it buying and holding cryptocurrency regardless of short-term market trends. Binance emphasized that this approach relies on choosing strong underlying assets, such as Bitcoin and Ethereum (ETH), which has historically increased in value over the long term.
The note also said that HODLing requires strong proof of the asset's future growth and is not suitable for everyone.
In addition to these strategies, Binance emphasized the the importance of diversification. A balanced portfolio could include Bitcoin as a store of value, Ethereum for its smart contract capabilities, and other growth-oriented tokens such as Solana (SOL) and XRP (XRP).
Diversifying across multiple assets reduces exposure to the risks of a single investment.
To further manage risks, Binance recommended holding stables to overcome market downturns and explore stalls or farm produce to earn a passive income. The company also advised investors to use secure storage solutions, such as hardware wallets, and rely on portfolio managers to monitor investments.
Source link
