The crypto market is one of the most volatile among the financial markets. Crypto coins and tokens are not stable assets and are subject to constant fluctuations in price and sometimes huge price dumps or pumps. So, you must be confident about your decision-making and know when to invest in cryptocurrency.
In this article, we'll walk you through all you need to know when analyzing the best time to buy cryptocurrency. We'll also take a deep dive into strategies and tips for crypto investments. Let's dive in!
DCA Investment Strategy
If you plan to invest in any crypto asset, practicing dollar-cost averaging is best to shield yourself from possible losses. Dollar-cost averaging involves investing regular amounts consistently over a period regardless of the asset's price.
When practicing DCA, the best time to invest in cryptocurrency is at any time. Dollar-cost averaging, also referred to as the constant dollar plan, does not factor in current market prices. DCA can be a good way to reduce the effect of the market's volatility as it prevents massive dumps in price that one-time investments are open to.
When you distribute your funds into a crypto investment across a period rather than make a one-lump sum investment, your investment is not as open to volatility. If you erroneously place all your investment funds into a crypto asset that plunges the next moment, it can become a long-term loss where your investment doesn't perform well.
However, once you are unsure when to buy cryptocurrency, it's safer and easier to practice dollar-cost averaging and shield your investment from the market's volatility as much as possible.
There are different seasons in the crypto market, including the bearish and bullish periods. Crypto analysts make cryptocurrency future prediction to determine which coins will perform well and ignite a bull run and which might tank and fall to lower prices.
Understanding the market's current direction will enable you to know the best time to buy cryptocurrency. The bear market provides several opportunities for crypto traders to make good profits.
In a bear market, there is an extended period with more supply than demand, making the price of assets fall. The fall can get deeper as fear, uncertainty, and doubt permeates the market. When investors lose confidence in a coin, they are compelled to sell; those who believe the prices will continue to fall are called "bears."
Although it might be hard to predict when a bearish market will end, profit-making opportunities are available. Because asset prices fall too low in a bear market, it presents one of the best opportunities to buy cryptocurrency.
Even though it's hard to say when the price of an asset is at the lowest, you can practice DCA and buy low at different prices. When the market conditions improve, you can sell and profit via arbitrage.
Best Day to Buy Cryptocurrency
Is crypto a good investment to make any day of the week, or are specific days preferable for buying crypto other than the rest? Some theories give insight into what crypto traders believe is the right time to invest in cryptocurrencies like Bitcoin.
Some believe that the price of Bitcoin falls during the weekends, and Mondays are usually the lowest, while Fridays and Saturdays see a boost in price. Another theory suggests that most traders set their buy orders on the weekends, which execute on Monday, driving the price of Bitcoin higher.
The final theory revolves around the 9 to 5 workers. Most traders with long-term experience in the crypto market believe it's best to avoid buying Bitcoin when 9 to 5 workers get paid. They believe their spontaneous buying activities push the price of Bitcoin higher, especially from the middle to the end of the month.
Unlike the stock market, regardless of the day or time you wish to buy a crypto coin or token, the crypto market is always open. Whichever days you believe are best for buying Bitcoin or other coins, it's important to know when to sell.
When to sell?
Is it good to invest in cryptocurrency? Crypto investment can yield good profits when all conditions are met. One of the most important factors that determine whether you gain from your crypto investment, lose your profits, or lose part of your capital is when you sell. Here are conditions to help you determine when to buy cryptocurrency and when to sell.
When you've made significant profits
It could be a 20%, 50%, or 100% increase, regardless of which, once you're comfortable with the return over investment, sell right away. The crypto market is very volatile, and that 40% increase you saw cab disappear over the night and not come again for a long time.
The best mindset to profit well when investing in crypto is to take profits at specific targets. You can sell the proportion of your initial capital and leave the profits you've made in the investment pool. This will help you cut potential losses and preserve your capital.
When you've lost conviction about the future of a coin.
If a token is not performing well, it could be on a downward trail to losing value. If you observe that there aren't any recent developments or updates regarding the coin, or you notice the community support dwindling. It might be the right time to sell the coin and invest in better alternatives.
If a coin you buy loses value and the price dumps, it may not return to the price you bought. It's better to cut your losses and secure your capital than invest long-term in a project that would potentially lose relevance.
Trends in cryptocurrency charts
What is the best time to buy cryptocurrency? A quick answer to this question is to buy when the coin is at its low. One popular resource you can use to identify when crypto coins are at their lows is crypto charts.
The crypto chart above shows the Bitcoin prices range from January 2020 to June 2022. As you can see, there are certain trends in Bitcoin's price. At some points, it was at its all-time high; at other points, it performed averagely while hitting very low ranges at others. Before making a long-term investment decision on Bitcoin, do proper research to find a good entry or DCA to avoid market volatility impacts.
Manage your risks
Everything about your crypto investment hinges on how well you play the risky game. Investing right involves managing your risks calculatedly.
One important question to ask yourself when trying to manage your risks is this; is it right time to invest in cryptocurrency?
Several persons profess to be crypto experts, crypto analysts, or teachers and give financial advice on which coin to buy. Beware of scammers who advise you to invest in a coin; ensure you do proper research before buying any token.
Cryptocurrencies are considered high-risk; do not invest what you cannot afford to lose. There are medium-risk assets like stablecoins which you can invest in to hedge against inflation while still earning a good return over investment. Ensure you choose a good crypto exchange with secure liquidity pools for investment purposes.
Set limits to how much you trade or invest per time to avoid losing your entire savings or investment to unprofitable ventures. Gauge your risk appetite before delving into any coin. Ask yourself what you could lose if the investment doesn't go as expected; if you can't afford to lose it, don't invest.
Diversify your cryptocurrency
Avoid putting all your funds into one asset; diversify across different crypto assets. Diversification is one way to minimize losses and make safer investments over a long-term period.
There are different types of crypto assets you can invest in, including stable coins, governance coins, bitcoin, altcoins, and so on. Spreading your investment across different assets reduces the risk of your entire portfolio performing poorly.
One rule to keep your investment safe in crypto is avoiding being overexposed. Crypto coins are highly volatile, and if you buy just one coin, it can plummet the next moment and struggle to rise back to the price you bought it.
Always keep a diversified crypto portfolio and monitor the performance over time with the available crypto tracking resources. Most importantly, there are 10,000 crypto coins and tokens in the market; many of them are scam tokens. Ensure you research the coins properly before investing to avoid undesirable fortunes.
In summary - when is the best time to buy crypto?
It's not easy to predict the best crypto investment time due to the rapidly changing scenarios of the crypto market. Many factors determine the best time to trade cryptocurrency, and they change with time. Some tips shared in this article will guide you on how to invest wisely to get the best outcome.
The choice of the best time to buy crypto is based entirely on the method of investment you choose. If you practice dollar-cost averaging investment, you can buy anytime; otherwise, you can strategically buy low during a bear market.
Finally, you could also choose to generate profits easily using crypto mining hosting.