Robinhood’s stable feature for crypto investing

Robinhood revealed on Wednesday its latest feature allowing users to invest in the cryptocurrency market customarily and regularly for just one U.S. dollar without any additional fees in a bid to augment the company’s fast-growing parts.

The trading company announced that the reason behind releasing this feature is to provide a secure way to minimize the effect of cryptocurrency instability by giving users the right tool to invest in phases, a tactic known as dollar-cost-averaging (DCA).

The platform’s approach, however, is automatic investing instead of trading as it will securely create a crypto portfolio instead of allowing sales when the algorithm decides it would be financially appropriate to do so.

DCA is an investment tactic where investors can divide the total amount to be invested throughout periodic purchases of a target asset in hopes of reducing the effect of volatility on the overall purchase. The purchase can occur regardless of the asset’s set price and regular intervals, as it removes a big part of the detailed work of trying to time the market to make purchases of equities at the best prices.

“The crypto market can be volatile due to the nature of the industry. Investing on a recurring basis can help you focus on long-term growth, reduce risk, and reduce the stress of timing markets,” Robinhood disclosed on its blog.

Credit: Robinhood Blog

“Dollar-cost averaging encourages investing money gradually at regular intervals, rather than all at once and regardless of where market prices stand, in order to help smooth out the price swings that can sometimes occur,” it added.

While most crypto trading platforms charge a four percent commission fee, Robinhood is attracting its users by completely removing any extra charges when investing in Bitcoin, Ethereum, Dogecoin, and any other supported cryptocurrencies. 

As for Robinhood’s approach, it is relatively similar to traditional finance techniques, but the only difference is that it is applied to new technology, which gives it a more appealing twist.

According to the investing platform’s latest earnings report, revenues from crypto trading witnessed a 4,282 percent in 2021 Q2 in a fiscal year.

The feature released Wednesday will be “gradually” accessible to Robinhood’s userbase as of this month, but at the moment, only a selection of users can indulge in it.