How investors can hedge risks by auto-investing in mainstream tokens after the big dump of alts

Recently, the Crypto Assets market has experienced significant turbulence, leading many investors to develop a crisis of confidence in alts. However, from another perspective, this event may also have a positive impact on the long-term development of the market. In the current market environment, the rule of survival of the fittest and elimination of the weakest is particularly evident. Most alts have faced a decline of over 30%, while mainstream Crypto Assets, although also impacted, still serve as the market's barometer.

This event has sounded the alarm for small investors: do not invest all your funds into a single coin. A more prudent strategy is to allocate at least 50% of your funds to mainstream Crypto Assets such as Bitcoin and Ethereum. For investors looking to enter the mainstream coin market, regularly investing (DCA) in Bitcoin and Ethereum may be a method worth considering.

Regular investing is different from traditional trading methods. It does not take into account the highs and lows of current prices but instead invests at fixed intervals. Some investors choose this method because they are not proficient in technical analysis and cannot perform short-term operations. Others recognize that the success rate of short-term predictions is often around 50%, and therefore choose to adopt a long-term perspective.

The volatility of the Crypto Assets market is extremely high, as experienced investors can deeply relate. The market trend in 2020 is a typical example: at the beginning of the year, the price of Bitcoin was around $10,000, which plummeted to over $3,000 in March due to the pandemic, and by 2021, the price rose to over $60,000. This enormous fluctuation caught many investors off guard: some faced liquidation due to overconfidence, while others missed opportunities for not daring to buy at the bottom. In contrast, those investors who maintained stability during the process, even if temporarily trapped, ultimately achieved considerable gains.

One of the main advantages of regularly investing in Bitcoin is that, due to regular purchases, the holding cost tends to approach the average price during the investment period. As long as the investment period is long enough, such as over a year, the average cost is usually not too high. This is because, according to the financial market's "bull market short, bear market long" rule, the sharp rise phase of Bitcoin usually does not last long, typically only 1-3 months. In other words, the price is relatively reasonable most of the time.

However, regular investment also has its limitations. It is a "non-timing" strategy, so it cannot guarantee that any investment made at any point in time, for any duration, will be profitable. For example, an investment made regularly from December 2021 until now for nearly 5 months may be in a loss state. A more extreme example is that as of now, the 1000-day average price of Bitcoin (approximately equivalent to the cost of 3 years of regular investment) is around $28,000. If the price of Bitcoin falls below this level, investors who have been regularly investing in Bitcoin for nearly 3 years may face losses.

Therefore, the core principle of regular investment is to "choose assets that are bullish in the long term" and to be patient while waiting for the next cycle peak. Only assets that are rising in the long term can offset the risks brought by market timing.

For investors looking to adopt a regular investment strategy, it is recommended to choose fixed time intervals (such as monthly or weekly) for investing and to minimize subjective judgment, avoiding changes to the investment plan due to short-term price fluctuations. In the long run, the cost of a single investment is not the most important factor.

The current market environment may be a good time to start regular investments. Each time there is a significant fall or the price drops by more than 5000-10000 points, it can be regarded as a good opportunity for dollar-cost averaging.