Wednesday, August 10, 2022

When Is The Best Time To Buy Cryptocurrency

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Three Reasons Why This Might Be A Good Time To Buy Bitcoin

  • The crypto market is amid a bear run with its market cap dipping to below $2 trillion on September 20.
  • The worlds largest , has lost nearly 10% of its value as of 6:00 pm Indian Standard Time .
  • It has plummeted to below $43,000 despite highs of $47,000 this weekend.

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Why Are There So Many Cryptocurrencies

The majority of cryptocurrencies today are derived in some form or another from Bitcoin, which uses open-source code and a censorship-resistant architecture. This means that anybody can copy and tweak the code and create their own new coin. It also means that anybody is free to join its network or transact in it.

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How To Invest In Bitcoin And Make Money

Like any investment, making money depends on what price you buy and sell an asset for. If you sell when its price is higher than you bought it for, you will make money.

If you sell for a lower price than you bought it for, you will lose money.

For example:

  • If you had invested in bitcoin at the start of 2020 and sold on 31 December 2020, you would have made a 300% profit
  • If you had invested in bitcoin at the start of 2018 and sold on 31 December 2018, you would have made a 73% loss

Bitcoin is extremely volatile so the trick is not to panic and crystallise your losses by selling when its value inevitably falls. This is the same with all investments.

When Is A Good To Buy Cryptocurrency

Bitcoin: The best time to buy the cryptocurrency ...

As with any other asset, the best time to buy cryptocurrency is usually when everybody is panicking. Baron Rothschild summed this up well when he said the time to buy is when theres blood in the streets. Why is this the best time to buy an asset? Well, its because investors are prone to herd-like mentality. When the market is going down, the herd are likely to oversell in panic. This crowd mentality is actually hardwired into us as humans. After all, there is safety in numbers and doing what everyone else is. Being social creatures, human have survived and thrived through collective co-operation.

In cryptocurrency and financial markets, herd mentality actually harms investors. Ever wonder why you seem to be buying at the top of the market and selling before a rebound? The reason why is that you are buying when you see everyone else is buying and selling when the crowd is. Ask yourself: when you bought your cryptocurrency position, did you wait for a positive green day in the markets before buying? If so, you have done what 99% of people do and wait for a day or two of growth before feeling its safe enough to invest. With such a strategy, is it any wonder why most cryptocurrency investors buy near the top and sell at the bottom of the market?

Recommended Reading: What Does Halving Mean In Crypto

How To Value Cryptocurrencies Against Each Other

The first thing you need to know is that the price quoted for a cryptocurrency is not very useful when determining how cheap a cryptocurrency is. Just because you see Bitcoin at $7,500 a coin and Ripple at $0.60, this doesnt mean that Ripple is 12,500 times cheaper. Ripple has a lower price because it has 39 billion XRP tokens in its circulating supply, whereas Bitcoin only has 17 million coins available to buy. With this in mind, it is no wonder that Ripple appears to be significantly cheaper.

The cryptocurrencies market cap is the way of determining how expensive or cheap it is. This calculation is simply:

The cryptocurrencies circulating supply * its price = market cap.

When comparing the prices of different cryptocurrencies, the market cap metric is the one to look at. For example, Bitcoin at the time of writing has a market cap of $129 billion, whilst Ethereum has a market cap of $57 billion. From this, we can tell that Bitcoin as an asset is around 2.26 times more valuable than Ethereum.

EOS has a current market cap of around $11 billion and Ethereum has one at around $57 billion. This means if EOS achieved the same market cap it would generate a 418% return for investors and thats in a down market. In the past, Ethereum has achieved an overall market cap of $133.5 billion.

Why Crypto Is So Volatile

Crypto is worth what people are willing to pay for it.

This means that the price of crypto-assets can fluctuate at extreme levels based solely on market speculation. Factors that can influence the price of crypto include:

  • media focus
  • public announcements
  • the actions of individuals who hold large amounts of a crypto or who influence the price through social media

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Wait For Crypto Exchange

ETFs are extremely popular investment tools that let you buy exposure to hundreds of individual investments in one fell swoop. This means they provide immediate diversification and are less risky than investing in individual investments.

There is a huge appetite for cryptocurrency ETFs, which would allow you to invest in many cryptocurrencies at once. No cryptocurrency ETFs are available for everyday investors quite yet, but there may be some soon. As of June 2021, the U.S. Securities and Exchange Commission is reviewing three cryptocurrency ETF applications from Kryptcoin, VanEck and WisdomTree.

Are There Cryptocurrency Exchange

What Is The Best Time To Buy Cryptocurrency?

Given the thousands of cryptocurrencies in existence , its understandable you might want to take a diversified approach to investing in crypto to minimize the risk you lose money.

Multiple companies have proposed crypto ETFs, including Fidelity, but regulatory hurdles have slowed the launch of any consumer products. As of June 2021, there are no ETFs available to average investors on the market.

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Best Time To Buy Cryptocurrency

1. When the Momentum Effect is Strong

According to a report by Yale researchers, if the price of bitcoin follows a sharp upward trend over a week, its likely to stay on that track in the following week. This is called the momentum effect and its premise is simple: if prices increase they continue to increase on average and if they decrease they continue their descent. This theory has been corroborated in a variety of traditional assets like bonds, stocks, and currencies, at least in the short-term.

So, the best time to buy cryptocurrency would be when there is a marked increase in prices 15 to 20% as a general estimator. If you stay true to this strategy, youre likely to make an 11% return on your investment.

Its important to note that the momentum effect is strongest for Bitcoin. XRP and ether, though not as affected, are still governed significantly by its variables.

2. When There Is Global Instability

Cryptocurrency can be extremely profitable during crises like the current coronavirus pandemic. It experiences sharp jumps in circumstances like these. Thats why Bitcoins price currently stands at $8,607.01, a > 50% increase from its pre-pandemic numbers.

So, when the economic chips are falling, thats exactly when you hedge your bets in favor of cryptocurrency.

3. When Positive Investor Attention is high

4. When The Price Drops

Since Bitcoin is highly volatile, its understood that its prices will fall at some point.

What Is The Next Best Cryptocurrency

Theres no such thing as the best crypto. The notion is highly subjective, and a lot depends on what that cryptocurrency will be used for. Theres little point in comparing Bitcoin with various DeFi tokens, for example.

Its near impossible to predict which cryptocurrency is going to make it big next. For now, Bitcoin and Ethereum remain the best cryptos for long-term investment however, again, they may not be the best if they dont fit your investment goals.

To find out what your personal next best cryptocurrency is, understand what your investment goals are and clearly establish a trading strategy. Then, research the crypto market, watch the crypto space, and find the cryptocurrency that you think will both make it big and suit you as an investor.

Also Check: How To Convert Cash To Bitcoin On Cash App

Should I Invest In Bitcoin

Bitcoin is extremely volatile, but if you are willing to take the risk, first make sure you understand what you are investing in.

Also make sure you arent investing simply because you have a fear of missing out.

There are a number of questions you should ask yourself before getting involved:

  • Do I understand what I am investing in?
  • Am I happy with the level of risk?
  • How much more expensive is it now compared to a few months ago? If so, why am I wanting to buy a thing because its price is higher? Where else in my life do I do that?
  • Is there any evidence to suggest prices could rise even higher?
  • If I buy it now with a view to sell it for even more later, who do I think will buy it from me for that higher price and why?
  • If an asset is so great, why was I not interested when it was much cheaper?
  • Have I convinced myself that I am in some way in the know?
  • If you dont have answers to these questions, its probably not a good idea to invest. If you do buy bitcoin, make sure you arent putting money you need on the line.

    Find out: Cryptocurrency tips

    The Role Of An Exchange

    The Best Time To Buy Cryptocurrency Is Now Says Panthera CEO.

    Investopedia: Can you give us a short background on the history of how exchanges came into being?

    Vera: Sure. In the early days, there were no exchanges. The general public didn’t even know about Bitcoin. The only way to obtain Bitcoin was by mining it yourself or through a peer-to-peer transfer with someone else. Then came over-the-counter exchanges, at first unregulated, then more and more regulated as time went on. In 2015, the Coinbase exchange was born. Today, Coinbase is among dozens of exchanges operating in the U.S. and globally.

    Investopedia: What do investors need to know about exchanges?

    Vera: First of all, the major centralized exchanges, like Coinbase, Kraken, and others are heavily regulated. The first thing to know before choosing an exchange for investors is to check if it can legally operate in your jurisdiction. Even with well-regulated legal exchanges, don’t put all of your investment in one exchange at the same time. In other words, spread out your investments and hold as much as possible in cold storage. There are many bad actors in crypto and the best way to avoid them is to deal with well-known regulated exchanges, your own wallets and trusted custodians.

    Cryptocurrency, by its nature, attempts to be a type of currency, meaning it is not a government or company controlled currency but a peer-to-peer type of money. Exchanges can be centralized or decentralized in the way cryptocurrencies are managed and traded.

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    How Technical Analysis Can Help You Determine When To Buy Bitcoin

    Technical analysis is highly used in the aspect of trading and also for making a profound investment decision. By understanding TA, you can better understand bitcoin uptrend and downtrend signals which will make you a better decision-maker when it comes to trading bitcoin. For example, you can buy bitcoins when the price hits solid support or sell when the price hits a resistance level.

    According to Investopedia A support, refers to the price level that an asset does not fall below for period of time while a resistance level, is the price point at which the rise in the price of an asset is halted by the emergence of a growing number of sellers who wish to sell at that price.

    Dont get it twisted, even with enough technical analysis, you won’t find an immaculate entry and exit point. The significant way is to be smart and adhere to the plan you lay out before trading. You can buy bitcoin when it is moving upwards, sell at profit and it will still continue to go up even after you have sold out. That is fine-you have already made your profit. Dont be greedy, move on.

    Trading Indicators are another great tool that can help to find entry and exit points. We have several tools that investors and traders can use from the Fibonacci indicator, pivot points, and various other arithmetical indicators.

    Why Are Regulators Concerned

    The FCA has also warned investors to be wary about companies that promise high returns from cryptocurrency. The nature of investment means that there is never a guarantee of making money.

    From January 6 this year the FCA banned the sale of complex derivatives that speculate on cryptocurrency movements.

    This means that financial services cant offer retail customers contracts for difference, spreadbet options, futures and exchange traded notes that focus on digital currencies.

    Also Check: How To Check Bitcoin Price

    Why Is The Crypto Market Growing

    The crypto industry has come a long way since the founding of Bitcoin, and there are now over 4,000 cryptocurrencies available on the market. They range across the board from DeFi to stablecoins, NFTs, and more. Even with this surge in expansion and media coverage, many think that we are in the early stages of the industryĆ¢s growth.

    Perhaps the biggest sign of crypto market growth is the way it has affected the institutions surrounding it. Crypto adoption has increased, especially recently, because it is garnering high-impact use cases due to mainstream demand.

    Investment firms, banking institutions, and businesses alike are trying to find ways to incorporate it into their portfolios and payment options. Governments, in particular, are beginning to give serious attention to the use of stablecoins as CBDCs .

    While the volatility of the crypto market may cause more reserved investors a preliminary pause, even conservative banking platforms are beginning to suggest incorporating cryptocurrency investments for portfolio diversification. With so many use cases and offerings developing daily, crypto continues to make its way into more diversified households and portfolios.

    Invest In Companies Connected To Cryptocurrency

    The Best Time To Buy Any Cryptocurrency

    If youd rather invest in companies with tangible products or services and that are subject to regulatory oversightbut still want exposure to the cryptocurrency marketyou can buy stocks of companies that use or own cryptocurrencies and the blockchain that powers them. Youll need an online brokerage account to buy shares of public companies like:

    • Nvidia . This technology company designs and sells graphics processing units, which are at the heart of the systems used to mine cryptocurrency.
    • PayPal . Already a popular choice for people buying items online or transferring money to family and friends, this payments platform recently expanded to allow customers to buy and sell select cryptocurrencies with their PayPal and Venmo accounts.
    • Square . This payment services provider for small businesses has purchased over $220 million in Bitcoin since October 2020. In February 2021, the firm disclosed that Bitcoin made up around 5% of the cash on its balance sheet. In addition, Squares Cash App allows people to buy, sell and store cryptocurrency.

    As with any investment, make sure you consider your investment goals and current financial situation before investing in cryptocurrency or individual companies that have a heavy stake in it. Cryptocurrency can be extremely volatilea single tweet can make its price plummetand its still a very speculative investment. This means you should invest carefully and with caution.

    Also Check: What Are Bitcoins And How Do They Work

    The Ups And Downs Of Bitcoin

    Its hailed by fans as a market-disrupting liberation and demonised by many personal finance experts as a dangerous creation. One things for sure is that bitcoin is volatile.

    Since December 2020, bitcoin has enjoyed a theatre of dramatic ups and downs. We outline some of these here: is a bitcoin crash coming?

    The problem is that the price of cryptocurrencies is not underpinned by any intrinsic value. It is determined by one thing: confidence, says Mark Northway, investment manager at Sparrows Capital.

    So if you decide to invest, be prepared for a bumpy ride.

    When Is The Best Time To Buy Cryptocurrencies

    In principle, it makes sense to acquire investments while they are cheaper and then sell them when they reach their peak. This, however, is considerably more complicated than it appears. Its extremely tough to time the market, and its much more difficult with cryptocurrencies because these assets are significantly more volatile than the typical stock.

    Cryptocurrency values have been on a wild rollercoaster, making it virtually hard to pick the best time to buy. If you purchase now because prices appear to have reached a bottom, theres a risk theyll go much lower, and youll have bought too soon. However, if you wait too long, prices may soar, and you will have missed your chance. This is why the traders use the software tools such as divergence indicator to make valid decisions on the trade. Cryptocurrency, like equities, has no track record, therefore its anyones guess if these currencies will recover from their slumps.

    Major cryptocurrencies, such as Bitcoin, have recovered from downturns thus far. However, there are no assurances that these investments will continue to prosper, and there is a possibility that cryptocurrencies as a whole could collapse. If you buy at a low price with the expectation that it would rise, you may be setting yourself up for disappointment if bitcoin fails.

    Also Check: Why Cryptocurrency Is Going Down

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