Robinhood to Allow Automated Crypto Investments

by Christy Bieber | Published on Oct. 10, 2021

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Robinhood's new feature will help streamline cryptocurrency transactions.

A growing number of Americans are interested in investing in cryptocurrency, and Robinhood is one of the most popular brokerage firms to offer this. Now, the trading platform is rolling out a new feature that can make crypto investing even easier.

While Robinhood has long permitted its users to make automated investments in stocks and exchange-traded funds (ETFs), this feature has not been available for cryptocurrency purchases. That is set to change, as Robinhood is unveiling a new feature that allows its users to make automatic recurring crypto investments if they choose to do so.

Here's what you need to know.

Robinhood's new feature to streamline cryptocurrency transactions

Many people like to use automated investing, which is otherwise known as "set it and forget it," so they do not have to manually make the decision to purchase assets. The set-it-and-forget-it strategy is a common one that allows people to specify an amount of money to invest in an asset at a particular interval. For example, you could choose to invest $50 every Monday in a particular stock, ETF, or virtual coin.

Automated investing at regular intervals is not only convenient, but it eliminates the problem of trying to time the market. If you buy a little bit of a particular asset on a regular basis, sometimes you will end up investing when the price is down and other times you will end up investing when the price is up. This technique is also called "dollar-cost averaging."

This strategy can be especially valuable for more volatile assets that tend to have big shifts in prices -- such as cryptocurrencies. When you dollar-cost average into an investment, you avoid the problem of potentially timing purchases poorly and buying right before the price hits a high. Short-term swings in price won't matter as much because you'll increase the chances you end up paying a fair price over time by buying in at a bunch of different prices.

Unfortunately, Robinhood investors didn't have the option to use set-it-and-forget-it investing with cryptocurrencies. Now, that has changed. A substantial number of Robinhood investors have already been given the option to use automated investing for cryptocurrencies and everyone on the platform is expected to have access to the feature by the end of September.

Robinhood is not the only crypto platform to offer this service -- Binance and Gemini, which are two cryptocurrency platforms, also allow automated crypto investing. But Robinhood is one of the best-known brokerage firms to do so.

Interested in automating cryptocurrency investments? It's important to remember that while automated investing can reduce risk, there are still inherent dangers in crypto investments. These assets tend to be more volatile compared with stocks and ETFs, and the value of coins is often more speculative. Be sure to do your research and consider heeding the advice of many financial professionals like Suze Orman, who advise not putting any money into crypto that you can't afford to lose.

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