Author: Pedro Solimano, Decrypt; Translated by: Songxue, Golden Finance
The adage “timing the market beats timing the market” is more relevant than ever.
According to analysis by cryptocurrency research firm Ecoinometrics, the difference in monthly returns between longs and shorts is negligible — meaning investors would be better off betting on Bitcoin and Ethereum when it suits them best.
Over the years, Bitcoin and Ethereum have had very similar price performances, regardless of whether they are in bullish or bearish markets, with the exception of Ethereum’s first bull run after its launch in 2015.
For Nick, the founder of econometrics, timing the market is a fool’s errand. “There is too much uncertainty in financial markets to do that,” he noted. Adjusting investment strategies based on market conditions “does make sense.”
In econometric terms, they refer to their investing as “tactical” and point to two approaches when considering purchases: long-term macro cycles and market liquidity conditions.
William Cai, a partner at financial services firm Wilshire Phoenix, said efforts to time the market can ultimately be boiled down to timing.
“Historically, market timing has proven difficult for crypto assets to achieve sustained outperformance, especially over the long term,” Cai said. Given that crypto assets are still new, he believes that “a long-term perspective and investment horizon are appropriate.”
In other words, just be patient and wait. Tsai’s view has caught the attention of many other successful investors, who berate those who try to pick the exact moment to buy or sell an asset. Instead, they point to a consistent and recurring investing approach called dollar-cost averaging (DCA) as a winner.
Oliver Veliz, a professional trader with over 37 years of experience, said he has been dollar-cost averaging in traditional markets since 1981 and “has never stopped.” For Bitcoin, it has been his go-to strategy since 2020.
He concluded that the strategy worked “magically” by eliminating price concerns, “creating order in the accumulation approach and most importantly eliminating volatility.”