Crypto Investing
24 Feb 2022

Worried About Market Volatility? Try Our Systematic Investment Plan

Ananda Banerjee

Do you know what’s better than gulping down a cold drink on a hot summer day? Sipping it slowly and relishing every mouthful. Well, the latter is exactly what the Systematic Investment Plan (SIP) feels like.

Key Takeaways

  • A SIP or a Systematic Investment Plan for crypto is meant for sustained purchases.
  • Crypto dips can be created by the market manipulating whales (large investors).
  • Crypto SIPs follow the principle of Cost Averaging.
  • SIPs are better bets for those with lower risk appetite, small capital, and long-term goals.

Have you ever brought the dip only to see the market dipping further?

That’s not a hypothetical question. It happens. A realm as volatile as crypto does see several dips. But not every dip is a good buying opportunity.

That’s because dips in crypto, regardless of the token, are often induced by whales (large investors), who end up short-selling assets, only to buy them later. The deliberate price debasing in many cases isn’t an organic dip and might not be followed by a quick move. And while there are several organic dips to make good use of (provided you DYOR), it is way too much work to keep looking for opportunities.

This is precisely where a SIP comes in. A systematic investment plan lets you allocate a small chunk of your capital towards preferred assets, ensuring long-term buying and an average price. And if you look at the bigger picture, SIPs give you a better cumulative buying price, and that too with far fewer frowns.

But that’s not all there is. Read on to know how a generic concept like this one can become your biggest crypto purchasing tool.

What Are SIPs, and How Are They Relevant To Crypto?

A Crypto SIP, as the name suggests, is a recurring and systematic crypto buying plan. And due to its periodic nature, a SIP follows the principle of Cost Averaging.

In simple terms, this means ensuring a constant buying frequency and price for an asset, without having to lose sleep over timing the market.

And in a space as volatile as crypto, where sentiments and hype still play a role, Crypto SIPs make a lot of sense.

Crypto SIPs vs. Crypto Dip: The Math Involved

Imagine you have ₹120 (fixed capital) to buy as many units of a crypto asset as you can. The asset is priced at ₹10, so you will be able to purchase 10 units of the same if you buy it right away. There are two ways to go about it:

The “Dip” way: The price drops to ₹9, and you end up buying 5 units, thereby spending ₹45. However, after a few days, the price suddenly drops to ₹5 due to a sentimental move or some bad news. You assume this is probably the final dip and quickly end up buying 15 units at ₹5, thereby spending the remaining ₹75. The average price here is ₹6, as you now have 20 units of the asset and ₹120 invested.

And now, even if the asset dips to ₹4 or ends up moving sideways for a short while, you cannot add more capital to the average and lower the buying price. Your only option to register some gains is to wait for the asset to move beyond ₹6.
The “SIP” way: You allocate ₹10 each month for 12 months to buy some units of the asset concerned at a given price. And as the capital allocation is uniform, you might be able to get a better average price over an extended period.

For instance, imagine that the table below indicates how the demo asset moved in 2021, during a 12-month SIP run.

Table 1: Comparing SIP and Dip Buying Patterns
(Limited Capital of ₹120; Time Frame: 12 Months)

Table 1 makes it clear that the market has more or less moved in a range with a few dips along the way. And while limited capital and dip-buying would have depleted your capital by April, a steady ₹10 investment/month would help you collect 20.4 units of the asset, at an average price of ₹5.88 by December.

When To Prefer SIPs Over Dips

As you can see, both Dips and SIPs have their place in the crypto realm. However, you should consider crypto SIPs if any of the following applies to you.

You have a small corpus

Crypto SIPs can be excellent purchase instruments if you have limited capital to use. As the allocation is phased, you will not need to shell out a lot of money at once. Instead, you can automate monthly SIPs with as little as ₹100 in the preferred crypto asset.

Simply put, SIPs help you find the average buying price and spare you the risks of volatility.

You have a low-risk appetite

SIPs might not always get you the lowest price band in a given period. But what they will do is to find the average buy price, which could still be lower than the final selling price! SIPs even allow fixed, automated purchases, which defeat massive short-term price fluctuations and impulsive decisions.

You hope to have a hedge against volatility

The crypto market is brimming with whales who can push the market in any given direction, breaking even the strongest support and resistance levels with ease. SIPs, however, are independent of these levels. As they follow fixed buying cycles, they remain unaffected by short-term whale invasions.

You’re ready for long-term exposure

Do you know what HODLing is? It is appropriate to consider SIPs at par with other HODLing strategies. SIPs are long-term, recurring investments made into specific crypto assets, and are akin to holding them for a long, long time.
And as the prices are best averaged across purchases, the long-term exposure of SIPs is expected to give you an edge over short-term buying and selling.

You want fewer worries

Buying the dip requires identifying the dip via market indicators. And it’s a lot of grunt work that may turn out to be futile in the end. Drawing charts, finding trendlines, identifying support and resistance zones, and pushing for the right momentum and volatility indicators to discover a value buying zone is a different level of heavy lifting.

With Crypto SIPs, you do not need to worry about all that. While you would still need to get the fundamental analysis on point to identify the most promising assets, you don’t need to do the complex, technical work to find the right entry and exit points.

Can There Be Downsides To Crypto SIPs?

Yes, but the downside will invariably turn out to be an upside if you hang in there. Here are some of the so-called downsides to bear in mind before making your purchase:

  • No instant buying and selling opportunities;
  • Might block capital;
  • Not meant for day-to-day trading;
  • SIPs might not help identify key drops.


SIPs in crypto are safer, more reliable, and better in the long term. While buying the dip can give you that adrenaline rush and help you find key value buying points on daily or hourly charts, SIPs take a more persuasive stance towards bringing new investors into the crypto fold.

While both approaches have their pros and cons, sipping on a crypto drink sounds a lot more controlled and realistic than trying to outsmart the whales.

Interested in checking out other features that we offer? Download the CoinSwitch App right away and dive right in.

Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.


Ananda Banerjee

Content Writer

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