Bitcoin is known for its volatility, a double-edged sword. Bitcoin is known for its volatility, a double-edged sword that has turned some investors into millionaires very quickly while burning others along the way. If you are planning to purchase the cryptocurrency world, then the obvious question left is when the right time to do it. If you bought Bitcoin in December , then most likely ended up on a loss. On the contrary, if you bought in January , you could be sitting on a considerable profit. So, what is the best time to buy bitcoin? What indicators should you turn to for near-accurate analysis?
Not many people in the cryptocurrency industry have solid financial knowledge. Most cryptocurrency holders are self-taught while others rely on knowledge borrowed from the traditional financial sector. There is nothing wrong with that as long as the shoe fits. Economists have weighed in on the best time to buy bitcoin, giving their observations based on several factors and analysis. Academics from the prestigious Yale University developed a technique on past price action to predict the price of bitcoin.
Best time of day to buy bitcoin? Is That Even A Thing?
The research showed cryptocurrencies widely differ from traditional assets when it comes to the factors that determine price swings. Economists proved that Bitcoin, unlike stocks and commodities, heavily relies on momentum. In other words, this means that if Bitcoin is performing well, it will likely continue to do so in the short-term. According to this study, investors should purchase the leading digital currency if its value appreciates by more than 20 percent in a week.
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Traditional stock markets operate only during certain hours of the day and week. That means you can buy, sell, exchange, and trade cryptocurrencies anytime as long as you have an internet connection. Even though there are no trading sessions that account for more or less volume, there are certain parameters to take into account before buying cryptocurrency. According to multiple analyses on average daily bitcoin prices, Sunday and Monday are the best days to buy BTC.
The sole reason behind this statement is that prices tend to be at its lowest in those days. The demand for Bitcoin slows down during the weekends, pushing its price to be lower on Mondays. On the contrary, Bitcoin price is assumed to be high on Fridays and Saturdays.
Best time of day to buy bitcoin? Is That Even A Thing? | CaptainAltcoin
This theory suggests people decide to buy BTC during the weekends, and execute orders as soon as the week begins. In this scenario, volumes are higher on Mondays and a more cautious behavior expected as the week goes by. Experienced traders would typically avoid buying bitcoin in dates 9-to-5 workers get paid, usually in the middle and end of the month.
The logic is simple: when people have money in their pockets can buy bitcoin, driving demand, and its price higher.
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Now that we have a better understanding of which days to avoid when buying Bitcoin and other cryptocurrencies, the next issue to resolve would be the specific timeframe. The returns in the last eight years have usually been around 0. Some possible reasons to explain why Sunday evenings are the best time to buy BTC is that trading volumes on crypto exchanges usually drop during the weekend.
There are few active traders in the market and more sell than buy orders. The dip in buy orders and general trading volume means prices become more volatile at the start of the new week. While prices usually dip during the weekend, a reopening of many exchanges will drive volume back up, and usually push prices positively. Buying your stack at the weekend Sunday evenings precisely gives you a shot at being a fraction up when the markets start to reopen for a new week.
Retails investors constitute a significant percentage of bitcoin investors. A common practice among these armies of retail investors is to set up recurring buys that go off once they receive their paycheck towards the end of the month.
On the other hand, completing your purchases in the middle of the month or anytime before the month-end rush could allow you to get them for better prices. The above chart considers the period between Nov 30 to Dec 7. A close observation shows a patterned bitcoin dip approaching midday at UTC several days in the same week.
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That could suggest that midday purchases within the coming period provide a chance to buy BTC cheaper. The pattern repeats the following week from Dec 8 to Dec 16, barring a different price action on 15th December when prices spiked around noon.
Although the above charts do not provide a definite pattern for determining the best time of the day to buy bitcoin, it shows how one could time their purchases based on consistent price action for a specified period. Conclusively, the worst day to buy BTC is any day when prices are in an uptrend. Such rapid price growth is only short-term gains and climax with a period of consistent losses. Here are some of the most prevalent.
Markets are irrational.
Price swings may occur for no tangible reasons and change the market sentiment and outlook from bullish to bearish within a short time. Then almost everyone will literally be burning their money by selling at a low price. Media reports are another factor that adversely affects the price of BTC. Events such as a major exchange hack, the possibility of a Bitcoin ETF, and large institutional investments affect price either way. Capitalising on adverse media reports that suppress the price of Bitcoin may be another approach to scooping up coins at great prices.
Key industry events such as the Bitcoin halving historically push the price of BTC up in the months leading up to it and then eventually drops in the aftermath. However, buying in the months leading up to it allows investors to price in on the event reap quick short-term gains.