Knowing when to buy cryptocurrency is akin to having magical powers. When it comes to investing in cryptocurrency, timing is everything.
Just like with any other asset, there are certain times when it makes sense to buy and sell cryptocurrency. By understanding the trends and patterns associated with different times of the year, you can make informed decisions about when to invest.
When To Buy Cryptocurrency Jump List
Deciding When To Buy Cryptocurrency Using TA & Charting
Seasonal Trends In Cryptocurrency Markets For Buy/Sell Indicators
Media Coverage As A Factor In When To Buy Cryptocurrency
Time Of The Month As A Cryptocurrency Buy/Sell Factor
Cryptocurrency Community Engagement Metrics To Watch
When To Sell Cryptocurrency
Deciding when to buy cryptocurrency using Chart patterns and Technical Analysis
As with trading almost any instrument, charts and technical analysis are highly used by many traders when it comes to both deciding when to buy or sell cryptocurrency positions.
When you look at a chart, you are trying to identify certain patterns that can give you an indication of when might be a good time to buy or sell. There are literally hundreds of different chart patterns that have been identified over the years, and many different high quality charting software resources but here we will focus on just a few key ones.
Head and shoulders pattern is usually used as a sign of when to sell cryptocurrency
One of the most commonly cited chart patterns, the head and shoulders pattern is considered by many to be a reliable bearish reversal signal. The pattern is composed of three distinct peaks, with the middle peak (the ‘head’) being higher than the two flanking peaks (the ‘shoulders’).
The key level to watch for in this pattern is the so-called ‘neckline’, which is formed by connecting the lows of the two shoulder peaks. A break below the neckline is typically seen as a strong bearish signal and can be used as an indication of when to sell cryptocurrency positions.
Inverse head and shoulders used as an indicator for when to buy cryptocurrency
As you might have guessed from the name, the inverse head and shoulders pattern is the opposite of the head and shoulders, and is considered to be a bullish reversal signal. The pattern again consists of three peaks, but this time with the middle peak (the ‘head’) being lower than the two flanking peaks (the ‘shoulders’).
The key level to watch for in this pattern is once again the so-called ‘neckline’, which is formed by connecting the highs of the two shoulder peaks. A break above the neckline is typically seen as a strong bullish signal and can be used as an indication of when to buy cryptocurrency positions.
Double top is another TA pattern used as a sign for when to sell cryptocurrency
The double top pattern is another bearish reversal signal that is composed of two distinct peaks, with the second peak failing to surpass the first. The key level to watch in this pattern is again the ‘neckline’, which is formed by connecting the lows of the two troughs.
A break below the neckline is typically seen as a strong bearish signal and can be used as an indication of when to sell cryptocurrency positions.
Double bottom is a signal for when to buy cryptocurrency
The next chart pattern you can watch for would be a double bottom, which is the opposite of a double top and can be used as a bullish reversal signal.
The key level to watch in this pattern is the ‘resistance’ line, which is formed by connecting the highs of the two peaks. A break above the resistance line is typically seen as a strong bullish signal and can be used as an indication of when to buy cryptocurrency positions.
These are just a few of the chart patterns that you can keep an eye out for when trying to decide when to buy or sell cryptocurrency. Of course, there are many other patterns that you could look for, but these are some of the most commonly used and easiest to spot.
In addition to chart patterns, there are also certain times of year that cryptocurrency traditionally trends in specific ways. Let’s take a look at some of those trends below and how you might use these to decide when to buy crypto.
Seasonal Trends can help you decide when to buy cryptocurrency, or when to sell
There are certain season trends which are used by cryptocurrency enthusiasts and traders keen to try to time the market. These trends exist in a lot of different instruments, but with the relatively short history of cryptocurrency, this makes the trends in this particular sector backed by less long term data.
Below you will see a few key points to keep in mind when trying to time the market for when to buy cryptocurrency:
1. January and February are historically good months to buy cryptocurrency.
2. The summer months (June, July, and August) are generally not good times to buy, as the market is often slow during these months.
3. September and October are typically good months to sell cryptocurrency.
4. The end of the year is typically a good time to buy cryptocurrency, as the market has historically had good periods in November and December.
Of course, these are just general historical trends and there are no guarantees when it comes to timing the market. However, by paying attention to trends and being patient, you can increase your chances of buying in to the cryptocurrency market at the right time.
Media coverage as a tool to time your crypto buys and sells
Another thing to keep in mind when trying to time the crypto market is media coverage.
Even though it may naturally feel like the opposite is true, when there is a lot of hype around cryptocurrency, it can often be a good time to sell, as the market is often overbought at these times.
On the other hand, when there is negative news coverage or no news coverage at all, it might be a good time to buy, as the market is often undervalued during these periods.
If you genuinely like a particular cryptocurrency and believe in the future prospects of the token, it is always better to buy when the price is ‘on discount’ as opposed to when it is marked up.
This can be a bit of an emotional rollercoaster seeing as human nature is more designed to make you want to follow the crowd, rather than move against it. There is a famous quote in the stock market by a certain Warren Buffet that also rings true for deciding when to buy cryptocurrency which is “be fearful when others are greedy, and greedy when others are fearful”.
It may cause you to miss the very bottom, or the very top of market moves, but let’s be honest here, no-one ever really hits those consistently anyway. Do your best to maximise value from every buy or sell, and trust yourself above others.
Of course, you should always do your own research and have a trading plan before making any investment decisions and certainly not make decisions based on emotions or hype. That being said, media coverage can still be a useful tool to help you decide when to buy cryptocurrency, or execute sell orders but just in the opposite way as it may seem at first.
Is the beginning or end of the month better for determining when to buy cryptocurrency
Another thing to keep in mind when trying to time the market and when questioning when to buy cryptocurrency is whether it is the beginning, middle, or end of the month.
For many people, their paydays falls at the beginning of each month. This often leads to an influx of retail cash into the cryptocurrency market, as people use this money to buy crypto.
The end of the month is also often a good time to buy cryptocurrency, as people sell off their crypto positions to cash out before the month ends.
These are just a few of the things to keep in mind when trying to time the market. By paying attention to these factors, you can increase your chances of making money in the cryptocurrency market.
Crypto community engagement metrics to watch
In addition to the general factors mentioned above, there are also a few crypto-specific metrics that you can use to help you time your buys and sells.
1. Social media activity: The social media activity of a cryptocurrency can be a good indicator of market sentiment. If the social media activity is increasing, it might be a good time to buy, as more people are interested in the token.
If the social media activity is decreasing, it might be a good time to sell, as less people are interested in the token.
2. Developer activity: The developer activity of a particular cryptocurrency can also be a good indicator of market sentiment. If the developers are active and seem engaged, it might be a good time to buy, as the team is working on improving the project.
If the developers are inactive or seem uninterested, it might be a good time to sell, as the team might not be working on developing the project.
3. Trading volume: The trading volume of any cryptocurrency can also be a good indicator of market sentiment. If the trading volume is increasing, it might be a good time to buy, as more people are trading the token.
If the trading volume is decreasing, it might be a good time to sell, as less people are trading the token.
By paying attention to these crypto community engagement metrics, you can get a better idea of when to buy and sell your cryptocurrency, and what might be some of the next big cryptocurrencies.
When to sell cryptocurrency
Just like there are certain times that are better for buying cryptocurrency, there are also certain periods that can give you the edge on when to sell cryptocurrency. The right sell strategy on a timing front can be the difference between a hugely successful trade, and one which started well but slowly slips away into a loss as if you are stuck in quicksand.
Some of the examples below are almost in conflict with certain other statements, as the example surrounding enthusiasm and fear is quite complex in the sphere of crypto.
1. When the price is at an all-time high: One of the best times to sell cryptocurrency is when the price is at an all-time high. This is because you can definitely cash out at a higher price than you purchased it at and there is generally no bad time to take profits.
Whilst you do not want to leave huge amounts of profit on the table from incomplete upside moves, a profit is a profit nonetheless and you may be presented with another opportunity to buy again shortly after a retracement.
2. When you need the cash: Another good time to sell cryptocurrency is when you need the cash. If you need to pay for something with fiat currency and you are close to your original target sale price already, it might be an idea to sell some crypto to liquidate the cash that you need.
3. When there’s negative news: Another good opportunity to consider when to sell cryptocurrency is when there’s negative news about the project. This is because at least in the short-term the price is likely to go down when there’s negative news.
This is a tricky scenario, as you also want to buy on a discount for a project you believe in and not be swayed by negative sentiment completely but there is an argument to say that selling early in to a bad news cycle before picking a moment to buy back in at a discount is not a bad idea. With this scenario, you would effectively hold a larger amount of the same crypto for the same cost so could be more of a short term strategy.
4. When the market is bearish: Finally, another good time to sell cryptocurrency is when the market is bearish. This is because you can begin selling your crypto before the price goes down further and eats into your account balance.
The bullish/bearish cycles in cryptocurrency can be quite aggressive, and if you do not have a strong stomach for risk you will not want to be riding through a bearish retracement even as an avid believer in a project. There is always an opportunity to look at when to buy cryptocurrency again even in a downcycle but you do not have to buy and Hodl if you feel things are dropping further.
By paying attention to these factors, you can increase your chances of maximizing your gains from cryptocurrency trading and avoiding those bigger bearish cycles.
When You Know When To Buy Cryptocurrency, Make Sure You Also Know Who To Buy With
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