Here's an example:
Let's say you managed to buy 1 BTC last year at an average price of $40k. Now you have to wait for the price to get back to $40k to "break even".
Here are some scenarios:
If you buy 1 BTC at $19k, you lower your average purchase price to $29k.
If you buy 0.25 BTC at $19k, you lower your average purchase price to $35k.
If you buy 0.10 BTC at $19k, you lower your average purchase price to $38k.
So as you can see, if you buy again, even if it's just a little, it will help a lot to lower down your cost basis.
Now, if the price keeps dropping even further, things get really interesting.
For example, let's say the price crashes down to $8k.
You have 2 choices:
1) Just HODL and hope that Bitcoin one day goes back to $40k so that you can break even.
2) Buy a lot more, for example: You buy 2 additional BTC and lower your average purchase price to $18k!!! Now if Bitcoin goes back up to $18k you are breaking even.
This, my friends, is the power of averaging down.
Keep stacking.
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