The cryptocurrency market is constantly growing, with more people investing as time goes on. The drastic increase in the value of many cryptocurrencies has made them very appealing to investors.
However, anyone who wants to get into crypto is faced with the same challenge: choosing the best time to invest. This is no easy task as it requires a good understanding of the market as well as a carefully planned approach, taking into account multiple relevant factors.
In this guide, we’ll explain cryptocurrency and provide insights into choosing the perfect timing to invest in cryptocurrency. We’ll also go through some of the most common investment approaches that you might adopt.
What Is Cryptocurrency?
Crypto is an encrypted digital currency secured by complex cryptography systems. It is completely decentralized and is generated through a distributed database connected through nodes on a large number of computer networks.
The process of database spread is known as blockchain technology and is the defining technology and the basis upon which cryptocurrency thrives. This ensures not only the security and redundancy of cryptocurrency but also its independence from any central authority or system.
While Bitcoin, Ethereum, Tether, and USD Coin, among other cryptos, are the most popular, there are over 18,000 currencies worldwide as of 2022.
Why Does Cryptocurrency Matter?
The significance of cryptocurrency lies, first of all, in its massive potential. The value of some of the most popular cryptos has increased ridiculously in a relatively short period of time. The sheer market value of crypto makes it a viable investment for many people.
The speed, reliability, and relative security of crypto transactions also play a huge role; it has become somewhat more appealing than investing in traditional stock assets.
Additionally, cryptocurrency has been a very minimal, if not insignificant, factor contributing to inflation due to its scarce nature.
Today, many banks, financial institutions, sellers, and retainers have adopted cryptocurrency as an acceptable form of payment, which helps it gain even more influence.
Understanding The Crypto Market
The first step towards investing in pretty much anything is to understand the market. When it comes to crypto, it resembles traditional stocks in many ways, yet it differs in a few key points.
The main defining characteristic of the cryptocurrency market is its sheer volatility and instability. As a consequence, investing in such an industry is significantly riskier and potentially much more rewarding.
In addition, cryptocurrency, unlike the stock market, is completely decentralized, which further contributes to its instability. Being independent of any central authority and government regulations naturally makes it unpredictable.
The Best Time To Buy Bitcoin
There is always a best and worst time to buy any asset, digital or otherwise. The theoretical basis is simple: if you buy when prices are low and sell when they go high, you win. Of course, it’s a bit more complicated than that in most cases, especially when it comes to a market with huge volatility.
The Best Time Of The Year To Buy Cryptocurrency
Some argue that the crypto price goes down in certain months. It is suggested by some people that in August, January, and February, the market tends to slow down, making it a good month to buy Bitcoin. However, this is not really true.
There is no best time of the year to buy bitcoin. The market is subject to various changes within a year. The value of Bitcoin and any other cryptocurrency can rise and fall anytime, depending on many factors. Waiting for the best month to buy cryptocurrency may result in disappointment.
The Best Time Of The Month To Buy Cryptocurrency
Barring special circumstances where the market might suddenly crash, the best time of the month to buy Bitcoin is generally towards the end of the month.
From a statistical point of view, prices tend to be high in the first days of the month with more people buying. This can be due to many factors, including the fact that most people receive their paychecks at the end of every month.
Towards the end of the month, prices may go higher as fewer people are buying and more are selling after slight increases. The rule of supply and demand applies here.
Of course, this is not always applicable as it doesn’t consider the possibility of a steady increase or decrease in value over the course of a couple of months. However, it might be worth remembering, especially for people planning to invest in the short term.
The Best Time Of The Week To Buy Cryptocurrency
Statistically speaking, a slight decrease in prices is recurrently noticed on Thursday night and Friday morning. For instance, the average lowest price of Bitcoin was determined to be early on Friday morning (around 6:00 am UTC).
Again, the average lowest price may not be a reliable method. However, if you do the math and figure that this also applies to recent weeks, it may be a good time to get into the market.
The Best Time Of The Day To Buy Cryptocurrency
Choosing the perfect window to make your move within a day is challenging; it’s always five o’clock somewhere. However, data driven by the price evolution of Bitcoin, Ethereum, and others show that they often rise and fall at the same time of the day.
Based on statistical data, the early hours of the morning were recurrently observed to be the best time to buy Bitcoin and other cryptos.
The Best Time Ever To Buy Cryptocurrency
Determining the best time of the month, week, or day to buy cryptocurrency isn’t your best bet, although Friday at 6am, late in the month, can be as good a time as any to get your feet wet.
In any case, the most important factors to consider before making your move will heavily depend on the current state of the market and your own strategy and approach.
The best time to buy Bitcoin or any other cryptocurrency is always when prices decrease, and this can happen anytime. Timing crypto prices can be very challenging. The behavior of the market should be analyzed, and a clear investment approach should be carefully considered.
Many experts link the various crashes of the crypto market to the stresses in the global economy. High inflation and slow economic growth contribute, to a large extent, to the decrease in cryptocurrency prices. Economic recession prevents many people from investing in risky assets for fear of losing money.
If you’re confident that cryptocurrency prices, just like stock prices, are capable of going up again, times of economic hardship may well be the best time to carry out your cryptocurrency investments.
Fear And Greed
Crypto crashes have a tremendous emotional impact on most investors. This leads to many people making rash decisions and selling their assets for fear of losing more money. In the past few years, crypto crashes were often followed by a significant jump in prices, making this time of general panic a good time to buy cryptocurrency.
To buy low and to sell high requires careful market analysis and may prove difficult. However, the fear and greed index can be helpful in deciding when to enter the market.
How To Time Crypto Prices
Timing the cryptocurrency market can be a very challenging task. There is absolutely no rule of thumb that applies to all kinds of situations. Price rises and falls do not follow any steady or proven track record. This leaves room for guessing.
Timing cryptocurrency is actually discouraged by many experts due to the high volatility of crypto markets. It is more suitable for people looking to invest in the short-term, which is very unlikely to bring huge profits. This is also helpful for people relying more on regular cryptocurrency trading, which can take a lot of work.
However, suppose you want to buy crypto assets for the first time. In that case, it may be useful to consider the factors that we mentioned above, namely the global economy, the fear and greed index, as well as the best time of the month, week, and day to buy cryptocurrency.
It’s worth noting that many investment strategies do not require timing cryptocurrency prices. We’ll explore these in the next section.
What Is The Best Investment Strategy?
The best strategy will depend on many factors, such as your objectives, your investment style, how much you are willing to invest, and how much risk you are willing to tolerate.
We will argue that your best bet to gain huge profits and not lose money is to go for a long-term investment. The relatively short history of Bitcoin clearly favors a long-term approach.
Below are some strategies that proved effective for many people.
Buy And Hold (HODL)
This is the easiest approach that requires the least amount of planning and the least frustration. Buying cryptocurrency, holding on to it for an extended period of time, and then selling it when prices rise has proven very rewarding.
If you’re playing the long game, you can buy crypto assets, hold onto them for as long as you feel comfortable, wait till the market value increases, and sell them for a good price. When following this approach, you should always remain composed and not panic when the price falls, which it will, repeatedly.
Just like with stocks, buying cryptocurrency and holding on to it eliminates the guesswork that comes with day-to-day cryptocurrency trading and timing. It is a very reasonable long-term strategy that has proved more effective than many others.
Another simple and powerful approach is the dollar-cost averaging. It consists of investing the same amount of money, at regular intervals, in an asset. You do not need to figure out the best time to buy bitcoin or other cryptocurrencies. Instead, spread out your investments over time, and they will end up being averaged out.
A huge benefit of dollar-cost averaging is the removed pressure of trying to time the market and determining the absolute best day to buy cryptocurrency.
It is also convenient in a volatile market where a wrong guess can cause you to lose money. If you trust that the market will increase in value, then your investments are very likely to increase over time.
Lump Sum Investment
Lump sum investing is quite a bold move but with potentially very high rewards. Unlike dollar-cost averaging, you can invest all your allocated budget instead of spreading it over a few months or years.
This can be both a short-term and a long-term approach, although it has proved much more rewarding in the long run. It also requires determining a good window to buy crypto assets.
While investing money all at once doesn’t require figuring out the best time to buy crypto or constantly looking for the evolution of bitcoin prices, it may be helpful to do it at a relatively good time.
For instance, when a cryptocurrency price is quickly increasing, many investors will rush in, expecting prices to go even higher. This is known as the ‘bull market.’ On the other hand, when prices are steadily falling and investors are refraining from buying cryptocurrency, this is referred to as the ‘bear market.’
If you’re looking at buying when prices are at their lowest, you may want to do so in the bear market. Figuring out when the bear market ends and the bull market starts may be key to making a successful investment if you’re looking at the absolute best time to buy.
Investing all the money you have at once can generate the highest ROIs, especially in a steadily rising market. This can even be more effective than dollar-cost averaging, where you spread out the risk. Naturally, going all-in is much riskier, but the rewards will be much higher if you’re confident that the crypto price will go up over time.
How To Buy Cryptocurrency
If you plan to buy bitcoin or any other cryptocurrencies, there are many ways to do it. In all cases, you should be careful when making your first crypto purchase.
For instance, you may consider buying tokens from a trusted cryptocurrency exchange, where buyers and sellers exchange crypto tokens. You can also check out crypto exchange-traded funds (ETFs) to gain exposure to a large number of crypto projects.
Alternatively, you can choose to invest in companies that are linked to cryptocurrency and, more specifically, blockchain technology. Some major companies either use, own, or invest in blockchain technology. Their stocks will consequently increase along with the crypto value.
Making your first move into the very unpredictable world of cryptocurrency requires some thought. Regardless of your preferred approach, figuring out a good time to buy your first crypto assets can be very rewarding. Whether you consider the micro elements, such as the best day of the week to buy bitcoin, or the macro elements, such as the global economy, make sure that you carefully plan ahead for your investment and follow it through to your desired end.