💲When To Buy and Sell Cryptocurrency
BY DANNY COIN
Last updated
BY DANNY COIN
Last updated
nowing when to buy and when to sell is the most important question to ask if you want to make money from your crypto portfolio. No matter what crypto asset you choose, if you can accurately predict when it will rise and fall in value, you can make a lot of money from it.
Likewise, if an asset’s price is in freefall, knowing when to exit to keep your losses at a minimum is very important.
Like any other asset, determining the trends in the crypto market and forecasting the behavior of a specific type of crypto is challenging. Several factors are at play, and some will have a bigger impact on price movements than others.
In this article, we go through some of the major factors you should keep an eye on to help understand future price movements and what you should consider when buying and selling crypto.
One of the things that makes it particularly challenging to find the right moment to buy is that crypto is an asset traded 24 hours, seven days a week.
Other assets, such as stocks and commodities, have an opening and closing time which makes it easier to forecast future trends and helps you understand where the price will be on the next trading day.
With crypto, you could go to sleep when the price is at an all-time high and wake up to a price that is a new low level for the asset. You must have systems in place to track assets accurately all of the time.
It is recommended that you use the dollar price average strategy with crypto and space out your buying process over at least a few days if not weeks. This way, you minimize risk and improve your buying price.
If you are entirely confident that you are getting the best price, there is no harm in buying a more significant amount.
Generally, buying smaller amounts over a more considerable time will mean you are buying at different prices, and your overall average buying price will be more competitive.
It’s also wise to invest a small portion of your portfolio into crypto. Crypto is a highly volatile asset, and while many people have made a great deal of money from it, many others have faced severe losses.
Only invest in crypto an amount that you would be comfortable losing. Always keep in mind that it is entirely possible that the price of the asset you are investing in could plummet to zero by the next day.
For people trading crypto and making the most of quick swings, knowing when to buy during a typical day will be very important. Since crypto is so volatile, it is not uncommon to see major price differences within 24 hours.
Since the crypto market is always open, 24 hours a day and seven days a week, there is no closing and opening rate like other assets. Having a closing and opening time for the market does play a role in helping a person predict what prices will be, and it helps provide some stability to the overall price movements.
The leading crypto assets, such as Bitcoin and Ethereum, tend to follow a similar behavior pattern throughout the day regarding prices. For people in the US (according to Eastern Standard Time), the lowest price for these assets is in the afternoon.
People in other time zones should tune into the market for buying at this time (according to their time zones) to make the most of it. Generally, at this time, you get the lowest price for all the top-tier crypto assets.
If you are interested in other coins, such as Dogecoin or Shiba Inu, they will be at their lowest prices at roughly the same time. These tier-two coins also tend to follow the top-tier coins regarding price behavior though they can dip slightly earlier or later when compared to the leading coins.
Anywhere from the early afternoon till a little past lunchtime will be an excellent time to buy tier-two coins.
If your average price investing strategy dictates that you buy weekly, knowing the cheapest day of the week to buy will be helpful. Again, the top-tier coins follow a similar path.
Overall, Tuesday is the cheapest day for all the top-tier coins, such as Ethereum and Bitcoin. Thursday and Saturday are other days when prices are relatively low.
If you are considering other coins, it will help to look at the specific trends for those coins. Second-tier coins such as Dogecoin tend to follow the same path as the top-tier coins, but there is still room for deviation.
Ever since the Crypto Winter of 2022, the prices for nearly all coins have been behaving rather sporadically. While Tuesday, Thursday, and Saturday are the cheapest days (on average), it is not uncommon for prices to drop sharply on other days.
Before making a purchase, looking at the price history for at least the past eight weeks of a particular coin is a good idea to see when it tends to be the cheapest. Also, stay tuned into current news because you never know when a real-world event will cause a dip in crypto prices.
If you are investing for the long term and don’t need to buy frequently, one good buying spell for the entire month will be enough. In this case, you should buy at the very end of the month, during the last ten days.
Recent trends have shown that prices for all altcoins tend to be highest in the first ten days. This is when people have received their wages and are in the best position to invest in crypto. This buying behavior pushes prices up quickly for the first ten days of the month.
In the next part of the month, the second ten days, prices start falling. People who have bought early are looking to sell and make some returns from their assets.
As the selling continues, the prices also continue to drop, and in the last ten days, the prices usually settle at their lowest point for the month.
Considering how volatile crypto has been in the past year, there is no doubt there will be some exceptions to this rule. If you are considering buying monthly, it will help to look at the trading history of that particular coin for at least the past six months.
Timing a purchase can be tough when you are dealing in crypto. So many factors are at play that it is nearly impossible to give one more priority than others. Everything from current affairs to technology to wars and economic conditions impacts the price and volatility of crypto.
Some people have made an incredible amount of money from this asset in a concise period, which is often the reason people are attracted to crypto.
They believe that crypto can change their financial life as well. While it certainly can, you must remember many have also lost a lot of money through crypto.
The best strategy is not to go for overnight success but to take it slow and steady. You should aim to acquire crypto at competitive prices over a long period and then hold these assets until the price appreciates to a level where you are getting a good return.
At the end of the day, it boils down to how much risk you are willing to take and how long you can sustain that level of risk. Making small gains over a longer period is the best way to grow your portfolio and wealth when dealing in crypto.
Buying crypto at a reasonable price is only one-half of the equation. The other half is knowing when to sell. This is often more challenging for crypto investors than buying since it requires more risk management, and it’s difficult to tell the right time to sell.
Let’s look at some of the main factors you should keep in mind when it comes time to sell your crypto to help you get the best price possible.
The first thing to consider is the price of the asset. If your asset has increased in price since you bought it, you will earn a profit. The question is, is that amount of profit enough for you?
Each investor has their perspective, risk tolerance, trading style, and trade objectives. For some, it is about getting a small margin of return above what they invested so they can take their money out and reinvest it again.
For others, it is about seeing their overall portfolio value rise before they are happy with selling their crypto for a profit.
What makes this tricky is how volatile crypto is. It could rise to your desired price level in a matter of minutes and then crash down to your buying price or even lower. If the asset of the crypto has doubled or even tripled, this is generally a good time to sell. Once it drops to a settled price, you can repurchase or move to a different coin.
The price of a coin is one way of determining its value. There are a few factors that contribute to its overall value. Indirectly, these other aspects of the cryptocurrency play a role in the coin’s monetary value.
For instance, if the management of the cryptocurrency and the blockchain it exists on changes or if a key figure in the company were to change.
For instance, Tesla and Apple are well-known for their founders, Elon Musk and Steve Jobs. If those people were to be no longer in charge of those companies, the value that people associate with those companies would also change. Similarly, if you see that the number of people supporting a cryptocurrency starts to dwindle, you can be confident that the value and price of the crypto will drop as a result.
All these things play a role in the overall value of the company; when they start to decrease, it is a good time to get out of that asset before the financial value also starts to fall and you start incurring losses for owning that particular asset.
The crypto market is always changing. Something that was a great option and showed incredible potential a few days ago could be a sinking ship today!
It’s important always to be on your toes and ready to move at the slightest sign of trouble. However, this is not to say that you should make haphazard decisions and compromise your position because of a bit of turbulence.
When you see that another option in the market could offer you a higher or faster return, there is no harm in exiting whatever you are invested in and capitalizing on the opportunity that has presented itself.
While this is something that should be quite obvious to an investor, it is one of the hardest things to do. This is because when a person invests in a coin, or any asset for that matter, they are not just investing money, but they are also investing in their decision. They believe they have made a good decision, that it will give them a good return, and they are emotionally invested in it.
When something else comes up, or the coin doesn’t perform quite as well as they would have liked, they are forced to reconsider whether they made a smart decision by investing in the first place.
When they aren’t ready to accept this fact, they hang on to that asset with unrealistic hopes that it will rise again.
In a way, they are ego-bidding, and it becomes a matter of ‘being right’ rather than keeping their eyes on profitability and going where the money goes.
Another situation closely tied to emotions, and specifically fear is panic selling. This takes place when the price of an asset starts to dip without any warning, and it is a change that the investor had not anticipated.
It can also happen when the price starts falling beyond what the investor had imagined. In either case, it strikes fear in the investor, and to cut losses quickly, they sell as soon as possible.
Often, this is just temporary turbulence; the asset recovers its price soon after. In some cases, it does not only recover but also hits a new peak and goes far beyond what people had forecasted. In either case, the investor has lost money because they pulled out soon and lost even more in potential profits because they were too impatient to ride the wave.
Again, this comes down to how much risk one can tolerate and how patient one can be to see returns.
Selling to save money is always recommended, but you want to ensure you know what you are doing and understand the consequences of making that move. You shouldn’t start selling just because everyone around you is panicking and selling.
Getting the highest returns from your crypto investment requires time. There may be exceptions when you see price spikes and significant price movements, but overall, you must consider the long-term.
Giving your portfolio at least five years to mature is a rule of thumb for stocks and shares. Waiting for at least a year is not bad for something as volatile as crypto.
If you have finalized that you want to sell, consider whether you want to offload entirely or not. You are advised to sell in batches the same way you bought it. This allows you to earn an extra profit if favorable price changes occur.
Crypto gained high popularity in the early days because of its volatility and ability to quickly make people money. While many people make a lot of money quickly, you need a different approach to investing and trading if you want to scalp profits all day.
For the average investor only investing so their wealth doesn’t lose value over time, it is far more reasonable to invest in slower-moving coins that offer less growth but more stability. Keep yourself invested for a few months before you decide to make another move.
Cryptocurrency is volatile, and when investing in this asset, you will be motivated to buy and sell quickly.
Striking while the iron is hot can undoubtedly make you a lot of money, but it can also lose you a lot! Slow and steady wins the race, so track prices over time and make deliberate choices over the long term.
