Without any deep research or findings, we ought to have understood that cryptocurrency is one of the most popular words right now, mostly when it comes to trading. Still, issues are being faced by the people who trade this digital currency regarding how to know the best time to buy cryptocurrency.
As we should know, cryptocurrency trading is volatile trading that requires deep knowledge to understand the trade to understand how to trade digital currency. Even pro traders are yet to understand how the whole game plays out because the market is mostly controlled by so many determinants.
In the crypto world, there are a lot of determinants of the market, some of which are demand and supply, availability, investors, and government. These types of people play a big role in how the market moves up and down.
Volatility in the crypto world is inevitable, but there are certain principles to follow. As Sun Tzu once said, “If you know the enemy and know yourself, you need not fear the result of a hundred battles.” So if you want to be on the better side in the crypto world, you need to follow some steps, one of which is knowing the best time to buy cryptocurrency.
Table of Contents
- How To Know The Best Time To Buy Cryptocurrency
- Determinants Of The Cryptocurrency Market
- Strategies For Buying Cryptocurrency
- When Is The Best Time To Buy Cryptocurrency?
- Frequently Asked Questions About The Best Time to Buy Cryptocurrency.
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How To Know The Best Time To Buy Cryptocurrency
One of the amazing things about cryptocurrency is that it can be traded 24/7 with no holidays or opening and closing hours. Unlike stocks and commodities, the crypto market is not a regulated market but a decentralized market where no one controls how it works.
So, in that case, people get to buy and sell digital currency at any time of the year. That’s why you will see some people taking this as a full-time job to make their livelihood from it. But in all these cases, there are some best times to buy cryptocurrency, in which people have considered it some of the best times to buy cryptocurrency.
Meanwhile, before you invest in cryptocurrency, the best time to buy cryptocurrency is when you are ready to buy. In a nutshell, what this implies is that cryptocurrency isn’t a jump-in and get rich ASAP as it may seem, so you need to take some critical steps to understand the market.
Also read: How to Start Investing in Cryptocurrency: A Guide for Beginners
To understand the market and the best time to buy cryptocurrency, there are a lot of steps to follow. But there is a popular trend in the crypto world that most traders believe works for them, which is buying low and selling high.
Most crypto traders believe that when you buy a cryptocurrency at a low price, you sell it at a high price. This happens most of the time, but sometimes it goes south, affecting the portfolio badly. So before you even think about knowing when to buy cryptocurrency, you need to understand how the price is being determined.
The crypto price is determined by the demand and supply of the market. Also, there are still some people who play a significant role in driving up this demand and supply in the crypto market. So let’s take a look at this set of determinants of the crypto market before deciding the best time to buy cryptocurrency.
Determinants Of The Cryptocurrency Market
As you remember, cryptocurrency is a decentralized currency that exists digitally and virtually and uses cryptography to secure its transactions. As much as digital currency is operated in a decentralized form, there are still some determinants that play a significant role in the market.
So before setting out to understand the best time to buy cryptocurrency, let’s take a look at these people and the major impact they have on the market.
“The small fish” is used to refer to the minority or minor investors in the crypto world. This set of people invest a small certain amount of money into cryptocurrency and they are mostly crypto traders. This group of people also plays a role in the manipulation of the price of a cryptocurrency.
Small fish make up the majority of the crypto world as they are day-to-day traders who just want to earn profit any chance they see. As individuals, this group of people does not have a huge impact on the crypto price, but they do when they are combined. They can invest as little as $10 in the crypto market just to carry on their trade.
This set of players in the crypto world determines the price of cryptocurrency as they are the majority of people who invest their money in cryptocurrency. Even though some of the investments are small, they are still many when they come together, and they have the highest share in the determination of the market price.
The whale, as the name implies, is something big, just like the mammal whale. These are another set of players in the crypto market who are mostly investors.
They refer to a group of individuals that invest a large amount of money in cryptocurrency. Whales can pump hundreds of millions into the cryptocurrency market.
These types of people are individuals who have a disproportionately large holding in the cryptocurrency market compared to the small fish. In some instances, an account with a large percentage of available coins makes an account a whale, even though the account belongs to someone.
Whales are big players in the crypto market as they can affect the market with just one action. Such people we can refer to as “whales” in the crypto world are Elon Musk, CEO of Telsa, Brain Armstrong, CEO of Coinbase; Michael Saylor, CEO of Microstrategy; and more. Decisions by this group of people move the crypto market very fast compared to that of the small fishes.
Some of these people have made comments on their social media that have in one way or another affected particular cryptos. Elon Musk influenced Dogecoin sometime back in 2021 which affected it positively, while Brian Armstrong once commented on Bitcoin that after cryptocurrency negatively. Most of these people have a huge amount of money invested in cryptocurrency.
Institutions in the crypto world are the founding companies of cryptocurrencies. They are the creators of the crypto world, which allows small fish and whales to be able to invest their money. Without this group of people, there wouldn’t be any form of cryptocurrency to trade, regardless of knowing the best time to buy cryptocurrency.
There are over 20,000 cryptocurrencies in the world, which means the same for the creators, but not all of these cryptocurrencies are worth investing your money into. Some cryptocurrencies lack good backers, which makes them liquidate at the end of the day. These institutions affect the market as they are the sole originators of the cryptocurrency you want to invest in.
So before you buy any cryptocurrency make sure you carry out deep research about the creator because they might turn out to be underdeveloped crypto. Some crypto creators have a strong development team, a good road map, and backing from financial institutions.
In as much as cryptocurrency is a decentralized currency not being controlled by anyone yet, the government gets involved with it. To be clear on this, the government is also a strong party in the crypto market as they put in place regulations that may affect the crypto price positively or negatively.
The government mostly comes into the crypto world to protect its citizens as some of these crypto creators and investors only care about their profit. Countries like China, the United States, Singapore, and South Korea have all implemented regulations to protect their citizens in the crypto world.
So the four entities mentioned above all contribute to the crypto market in one way or the other. So before you know the best time to invest in cryptocurrency, make sure you have a good understanding of these determinants of the crypto market.
After getting to understand the determinants of the crypto market and before we go on with knowing the best time to buy cryptocurrency. Buying cryptocurrency requires enough understanding of the market and strategies used in trading.
Strategies For Buying Cryptocurrency
Before having the mindset of knowing the best time to buy cryptocurrency, you should know that certain strategies rule the world of crypto trading. So I will be explaining the best strategy used by some professional crypto traders for buying cryptocurrency.
Dollar-cost averaging is one of the best strategies to use when hodling in cryptocurrency. Hodling is one of the best strategies to put in place when it comes to building wealth with cryptocurrency. It is slang used to refer to a long-term strategy by which a crypto investor buys and holds on to a cryptocurrency for an indefinite period.
Meanwhile, dollar-cost averaging is a long-time investment pattern in which a crypto investor invests a certain sum of money in small installments and not in an all-ones buying. What this implies is that an investor divides a certain amount of money they want to invest into particles and invests them over some time.
Also read: 10 CRYPTOCURRENCIES TO BUY NOW FOR LONG TERM INVESTMENT
With this strategy, investors take advantage of the downtrends in the market to make a profit. Let’s assume you have $1000 to invest in cryptocurrency, so with the dollar-cost averaging strategy, you can decide to divide that money into $200 for five months. So for every month, you put $200 according to the DCA strategy.
DCA is good mostly during the bear market period as it goes well with the price fall and you get to earn more profit. This strategy is better than going “all in” as it gives more profit and also puts an investor on the safe side.
So we’ve got to understand some of the things needed before investing in cryptocurrency and knowing the best time to buy cryptocurrency. Now let’s take a look at when the best time to buy cryptocurrency is.
When Is The Best Time To Buy Cryptocurrency?
There is one thing we should understand when it comes to the crypto world, there is no perfection. So while looking out for the best time to buy cryptocurrency depends on you, when you are ready to buy. Also, most people buy when the market is low and sell when the price is high.
Buying low and selling high is one of the most popular strategies to follow when looking for the best time to buy cryptocurrency. That is why strategies like dollar-cost averaging are put in place to help get the best out of the crypto market.
Frequently Asked Questions About The Best Time to Buy Cryptocurrency.
Should I buy a cryptocurrency when it is high?
Buying cryptocurrency requires an understanding of the crypto market and deep research. In the crypto market, the trend being followed is always buying when the market is low. So, if you want to make money, the best time to buy cryptocurrency is when the price is low.
When is the best time to buy cryptocurrency?
The best time to buy cryptocurrency is when you are ready. What this implies is that the crypto market is a volatile market that doesn’t guarantee a profit on every trade. But using strategies like dollar-cost averaging can help you get the best out of the market than just buying without a strategy.
When is the wrong time to buy cryptocurrency?
The cryptocurrency market is not perfect and doesn’t have a time stamp for every action. When you are to buy crypto you make sure you carry out your research and follow the buy at a low price strategy. Most crypto traders believe that if you buy crypto when the price is high, then you might incur a loss.
In the crypto world, there is no best time to buy cryptocurrency, either during the day, week, or month. The best time to buy is when you feel you are ready to invest your money, so you will be better off if things go south. Also, using the dollar-cost averaging strategy can be of help in reducing the risk of losing your investment.
The information provided in this article on how to know the best time to buy cryptocurrency is provided only to be used as a tip for your research. So, before investing in any cryptocurrency, do your research.