Investing €50 in Bitcoin – during a “pump”?
A “pump” refers to a sudden strong price increase of Bitcoin, often triggered by positive news or market sentiment on the exchange. A “dump” often follows, where the price rapidly falls again because many investors cash in on their profits. These sharp fluctuations make a pump risky, especially for inexperienced investors.
Those who wish to invest in Bitcoin during a pump risk entering at an inflated price and subsequently suffering losses. “FOMO” (fear of missing out) often plays a role here, the fear of missing a chance. Instead of acting impulsively, long-term strategies like buy and hold or the cost-average effect are more advisable. In this case, you invest regularly, for example €50 per month, thereby reducing the risk of entering the market at an unfavourable time. A pump may seem tempting, but with patience and a well-thought-out strategy, you can benefit more sustainably from the Bitcoin market.
To better avoid the risk of a pump and invest strategically in Bitcoin or other cryptocurrencies, you should be aware of the different investment options.
Ways to invest in cryptocurrencies
There are different ways you can invest in cryptocurrencies such as Bitcoin. Your options depend on factors such as your financial goals, your risk profile and the amount of time you want to dedicate to your investment. Broadly speaking, a distinction is made between one-off investments and regular contributions made through a savings plan. Both methods have their advantages and disadvantages and offer different opportunities to participate in the crypto market.
Let’s take a look at which options are available to you.
Investing in Bitcoin over five years with €50 per month
If you invest €50 per month in Bitcoin over a five-year period, you benefit from the cost-average effect. With this method, you buy Bitcoin regularly, regardless of whether the price is currently rising or falling. This approach reduces the impact of price fluctuations, as you get more Bitcoin for your money when prices are low and less when prices are high.
Advantages of the method:
Risk minimisation: You avoid trying to find the “perfect” entry point and spread your risk.
Planning certainty: With €50 per month, you have a fixed savings rate that can easily be incorporated into your budget.
Long-term growth: Over five years, you can benefit from potential price increases while being less affected by price drops and even have the opportunity to buy additional shares at a lower price.
Challenge:
The method requires discipline and a clear focus on long-term goals, as you must continue investing regularly despite price fluctuations. Transaction fees can reduce returns on small amounts, and despite the cost-average effect, there’s still the risk that the price may stagnate or fall over a longer period. You should also ensure your monthly budget can accommodate regular expenses without issue.
One-off €50 investment in Bitcoin
A one-off investment of €50 in Bitcoin is particularly suitable for investors who want to test the market without committing long term. The method is easy to implement: you buy Bitcoin at a fixed rate and then observe how your investment performs.
Advantages of the method:
Quick entry: You invest immediately and don’t need to do long-term planning.
Simplicity: The method is ideal for beginners looking to gain initial experience with cryptocurrencies.
Flexibility: You can hold, buy or sell the investment at any time.
Challenges:
A one-off investment carries the risk of buying at an unfavourable time. If the price drops after your purchase, the value of your €50 can quickly decline. To reduce the risk, you should be aware that the Bitcoin price is highly volatile, and short-term price losses are generally unavoidable.
