Crypto and stock trading platform Robinhood has released a new feature that will enable users to make recurring investments on its platform. The new feature termed dollar-cost averaging or DCA will also allow access to Bitcoin derivatives. Apart from making it possible for its users to escape periods of extreme volatility, Robinhood’s DCA feature is geared toward helping them habitually save.
Robinhood’s definition of DCA is a trick to lure Bitcoiners over with their slang. The DCA strategy is a common trading/investing method among traders. It means investing in a preferred crypto asset at regular intervals rather than a one-time investment, irrespective of where the price of such an asset is. The concept is attempting to profit as little as possible from an asset while being wary of the potential losses.
Robinhood Accused of Halting Trades At Intervals
However, Robinhood’s past antecedents are mired in unreliability and a host of other controversies that the new feature it introduced may be a trick to attract new users to the platform. Based on the reviews of some users, Robinhood is fond of stopping trades especially during periods of an uptrend. It gets worse when people realize that rather than buying Bitcoin, as supposed by Robinhood, what they are buying is an IOU for the dollar price of Bitcoin. Robinhood does not have Bitcoin on its platform, neither does it have public keys or a withdrawal feature for Bitcoin.
Additionally, Robinhood lacks Bitcoin to match the trades of its users on the order book and it is known if the platform stores Bitcoin on behalf of its users as well. During price peaks on Gamestop (GME) stocks and meme cryptocurrency, Dogecoin, Robinhood had allegedly hidden under the guise of system failure to stop trades, thereby preventing traders from claiming the gains on these assets.
Robinhood has reportedly lied about the details of its Bitcoin price exposure. During the announcement of the DCA feature, Robinhood claimed that purchasing Bitcoin with $100 gets you $100 worth of Bitcoin. Contrary to the platform’s claims, one is most likely to pay taxes after being forced to liquidate his Bitcoin asset. Robinhood is an unsuitable platform for anyone who intends to store Bitcoin in the short term much less for a long-term investment.
The introduction of the DCA strategy is no more than a vain attempt by Robinhood at enticing Bitcoiners. Before its introduction, there was nothing that prevented traders from adopting the DCA strategy while investing on the platform rather than its intermittent trade deactivations owing to alleged extreme market volatility.
Robinhood Incentivizes Users with Zero Costs for DCA
Robinhood rolled out the zero cost incentive alongside the DCA feature. However, it is not likely that traders would be able to DCA on Bitcoin derivatives or cryptocurrencies amid random trading restrictions and almost regular maintenance that Robinhood shows. Robinhood utterly differs from what Bitcoin represents. Bitcoin preaches decentralization, but Robinhood exercises arbitrary control over the accounts of traders including on their trades. Thus, Robinhood ranks low on the pecking order if you attempt to buy Bitcoin on an exchange.