Greetings community,
This article is going to examine the price action of Midas coin, and present the results of a steady and continuous DCA (Dollar Cost Averaging) investment strategy over the past 12 months. This is intended for educational purposes only, and should not be considered financial advice. Always do your own research before making any investment and do not invest more than you are willing/able to lose!
Now, onto the strategy!
Below is a graph of the Midas price from May 2019 – May 2020:
As you can see, the price of Midas has fluctuated, but has a general upward trend over the past year.
Beginning with a price of ~$.34 in May of 2019, the price reached a low of ~$.14 in July, but has since risen to a high of ~$.70 as of the beginning of this month.
Price snapshots were taken on the first day of each month.
The strategy is as follows: on the first day of every month, the investor purchases $100 of new Midas coins, which are held in a Midas Instant share on the Midas.Investments platform.
The chart below represents the portfolio growth as a result of this strategy:
The blue bars represent the total invested capital, and grows in $100 increments on a monthly basis. The red bars represent the portfolio value of the Midas coins, taken on the 1st day of every month.
For the first few months of the strategy, as the Midas coin value was declining, the portfolio shows a slight loss (red bar shorter than the blue bar). However over the long term, this is nothing more than a buying opportunity.
As the months progress and the value of Midas coins recover, the portfolio value greatly improves. At the end of the 12 months, the total amount invested is $1300 ($100 added every month, starting with a $100 value). But the total value of Midas coins purchased + compounding coin rewards amounts to $4100. This represents an astounding 315% ROI over one year.
While we cannot guarantee any specific result, the benefits of a DCA strategy are obvious, as it is a proven investment strategy that is successful across various types of markets in bearish and bullish seasons alike.
It’s important to note that all coins purchased were on an instant share, and for this result the rewards were reinvested. Over this period, a total of 4259 coins were bought, however the final balance of Midas coins was 5837. The difference in coin amounts is from the rewards accumulating.
But not all investors are privy to holding their rewards, and choose to progressively sell their rewards. The question is: is the DCA strategy still beneficial in this case? The answer: YES!
If an investor follows the same strategy, but sells only the coin rewards on the 1st of every month while simultaneously buying $100 of new coins, the following result is achieved:
Once again, the blue represents the total amount invested, the red represents the value of Midas holding, and now the yellow represents the cumulative dividend acquired by selling coins.
The amount invested remains $1300, but in this alternative strategy the Midas holding is $2990 and the dividend received is $557.
Since Midas coin has been bullish overall, selling the coins monthly is not quite as profitable as holding in the long-term. However, for coins with a different (bearish) trend, the strategy of periodically selling coins provides more portfolio stability.
We hope that this article was informative for you, and that it shows the positive impact of a DCA strategy on your portfolio. It is always better to have a reliable investment strategy to avoid FOMO-ing into positions that you will later regret. This also shows the power of reinvestment, and how its effects are compounded in the long-term.
We will be doing a DCA analysis on several coins listed on the Midas platform in the coming weeks. Stay tuned for more updates!
