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Cash App Launches Bitcoin Paycheck Conversion Feature at Bitcoin Miami – The Motley Fool

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by Emma Newbery | Published on April 8, 2022
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Does dollar-cost averaging work with Bitcoin?
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Bitcoin enthusiasts gathered in Miami this week for Bitcoin 2022, its annual conference. Big names from crypto such as Michael Saylor, Cathie Wood, Peter Thiel, and Anthony Pomplaino joined thousands of attendees for four days of talks, discussions, celebrations, NFT art, and much more.
One of Thursday’s most notable announcements came from Jack Dorsey’s, Block (formerly Square). The team announced that U.S. customers can now use Cash App’s “Paid in Bitcoin” feature to automatically convert their salary (or part of it) into Bitcoin.
Clients who’ve connected their Visa debit cards to the service via its Cash Card function can opt to automatically convert a percentage of each direct deposit into Bitcoin (BTC). The amount can be adjusted at any time.
Cash App also announced the following new developments:
Cash App has made some big strides in Bitcoin integration, making it easy for users to use their balance to buy and sell Bitcoin. Unlike other cryptocurrency apps, Cash App only trades Bitcoin.
Here at The Ascent, we are fans of long-term investing — building wealth by buying assets you plan to hold for the coming five to 10 years or more. One popular way to do this is to automatically transfer a percentage of your monthly salary into your investments. Automating your investments can help prioritize them and ensure the more immediate demands on your paycheck don’t push them out of the way.

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We’ve found one company that’s positioned itself perfectly as a long-term picks-and-shovels solution for the broader crypto market — Bitcoin, Dogecoin, and all the others. In fact, you’ve probably used this company’s technology in the past few days, even if you’ve never had an account or even heard of the company before. That’s how prevalent it’s become.
Sign up today for Stock Advisor and get access to our exclusive report where you can get the full scoop on this company and its upside as a long-term investment. Learn more and get started today with a special new member discount.
Regular contributions can also protect against Bitcoin’s volatility and avoid analysis paralysis as you wait for the right time to invest. It is extremely difficult to buy the lows and sell the highs, especially if you don’t spend all your time watching crypto prices. But buying a small amount at regular intervals — also known as dollar-cost averaging — can help even out the price swings without costing you a lot of time.
We analyzed some simplified scenarios to see how dollar-cost averaging compared to lump-sum investing using last year’s Bitcoin prices. Let’s say you had $1,200 to invest in Bitcoin at the start of 2021. If you’d invested it all in Bitcoin, you’d have gotten about 0.038 BTC, which would be worth about $1,650 today. However, if you’d waited and invested that same $1,200 a few months later in April, you’d have gotten 0.021 BTC, which would be worth almost $900 today.
If you’d opted instead for dollar-cost averaging and invested $100 on the fifth of every month, you’d have ended up with 0.027 BTC — worth almost $1,200 in today’s prices. You wouldn’t have beaten those who managed to invest a lump-sum investment at one of Bitcoin’s lows, but you would have also done better than lump-sum investors who unintentionally bought at a higher price.
There are a few useful conclusions we can draw from these examples. First, Bitcoin is not a get-rich-quick scheme — the price is currently down 35% from its all-time high. If you’d invested $100 a month last year, right now your Bitcoin would still be worth less than the cash you put in. But what matters is whether you believe in Bitcoin’s long-term potential. If so, you can wait out these short-term dips and continue to build on your Bitcoin holdings in the hope that today’s Bitcoin will be worth a lot more in 10 years’ time.
Secondly, in many scenarios, dollar-cost averaging wins out over trying to time the market. Sure, if you had bought in January, you’d be in a better position today. However, at a practical level, you might not have had $1,200 to spare last January. For many investors, it’s more realistic to put $100 toward investments each month than spend a lump sum. And in January 2021, nobody knew what the year had in store for us. The price may have fallen. Or you might have waited, got scared of missing out, and bought in March or April — as many investors did.
Automated contributions won’t be right for every investor. And it isn’t a choice between lump sum or dollar-cost averaging — there are other strategies too. For example, some investors choose to “nibble” the dips, buying small amounts every time Bitcoin falls below set levels. It’s good to find investment strategies that suit your habits, knowledge, and financial position.
If you’ve done your research and thought about how the lead cryptocurrency might behave in the long term, putting a small amount of your salary into Bitcoin each month may be right for you. However, it should not come at the cost of other financial goals. If you’re trying to pay down debt or build up an emergency fund, these should take priority over high-risk investments such as Bitcoin.

The right crypto investing mindset

Investing in crypto can be extremely risky. We think investors should approach these assets like any other technological investment — with a long-term mindset and the expectation of ups and downs. The Fool realizes there may be opportunities for investors. We do actively recommend select cryptocurrencies to our community. But we encourage everyone to be well versed prior to investing to understand the potential risks and rewards.

None

Investing in crypto can be extremely risky. We think investors should approach these assets like any other technological investment — with a long-term mindset and the expectation of ups and downs. The Fool realizes there may be opportunities for investors. We do actively recommend select cryptocurrencies to our community. But we encourage everyone to be well versed prior to investing to understand the potential risks and rewards.
Many people have seen the headlines about crypto millionaires or billionaires and bought Bitcoin because they are scared of missing out. Bitcoin may be a good way to build wealth, but it needs to be part of a thought-out investment strategy that includes other assets such as stocks or real estate. It isn’t going to make you into a millionaire overnight, but regular contributions to crypto and stock investments could help you build wealth in the long term.

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Emma owns the English-language newspaper The Bogota Post. She began her editorial career at a financial website in the U.K. over 20 years ago and has been contributing to The Ascent since 2019.
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
Emma Newbery owns Bitcoin.
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