What I Learned From Buying $5 of Cryptocurrency Every Day for a Year (Part 1)

The author's year-long experiment involved purchasing $5 worth of cryptocurrency daily at a set time. Their aim was to understand the crypto market and the effects of consistent investing.

Initially, the author intended to diversify their risk by investing in a wide range of cryptocurrencies. They also aimed to uncover the potential for small, regular investments to yield meaningful growth. However, they encountered a more complex reality.

One striking observation was the extreme volatility of crypto prices. Some days saw the value of the purchased coin rising by 15% or more within hours. Conversely, there were instances of a coin's value dropping by a similar magnitude—or even more—overnight. These drastic and frequent price fluctuations exceeded the author's expectations, leading them to check their portfolio more frequently than anticipated.

Despite investing in numerous cryptocurrencies, the author's overall portfolio remained highly unstable. When one coin's price declined, it often had a domino effect, dragging the prices of other coins down with it. The author realized that the entire market seemed to move in unison, rising and falling like waves. This unpredictability highlighted the difficulty of maintaining composure in such a volatile market.

Initially, the author believed that spreading their investment across 365 cryptocurrencies would serve as a buffer against significant losses. Their logic was that if one coin performed poorly, others might compensate for it—or so they thought.

However, they discovered that when the entire market trended downward, nearly all the coins experienced a collective decline in value. Despite each cryptocurrency being unique, they were often influenced by the same market forces. There were moments when a few coins gained value, but these small wins were rarely sufficient to offset the losses across the rest of the portfolio. This showed the author that while diversification is helpful, it doesn't guarantee stability in a market as interconnected as crypto.

Timing Is More Important Than You Realize

The author's plan was to buy $5 worth of crypto every day at the same time, irrespective of the market's movements. While this approach was simple, it often led to buying at less-than-ideal prices. Some days, they got lucky and bought a coin just before its price went up. But on other days, the value of my investment would drop immediately after I purchased it.

This taught them an important lesson: timing matters a lot in crypto. If they had paid attention to trends or researched when to buy, they might have avoided some losses and made smarter decisions. Consistency was easy, but it didn't always yield the best results.

Gaining Knowledge About Cryptocurrencies

One unexpected benefit of this experiment was the opportunity to learn about so many different cryptocurrencies. Each day, the author would take some time to research the coin they were buying. They learned about their goals, the teams behind them, and the problems they aimed to solve. Some projects seemed innovative and had real-world potential, while others felt more speculative and risky.

This process deepened their understanding of the crypto market and helped them identify which types of coins might be worth considering for long-term investments. While they didn’t always make profitable choices, the knowledge they gained was invaluable.

The Emotional Rollercoaster of Crypto Investing

One thing the author didn't anticipate was how emotionally draining this experiment would be. Watching my portfolio's value fluctuate every day was both exciting and stressful. On days when a coin's value increased, they felt optimistic and energized. But on days when prices dropped, they found themselves feeling frustrated or disappointed.

This taught them an essential lesson about crypto investing: emotions can easily influence decisions. The key to navigating this market is to stay calm and avoid making impulsive choices based on short-term changes. Crypto prices are unpredictable, and it’s easy to feel overwhelmed if you’re not prepared for the wild swings.