Image source: Getty Images.
Cryptocurrency is a volatile asset class that experiences a lot of ups and downs. People often get the idea that they should try to time their investments by purchasing within specific windows to get the best possible price. However, because cryptocurrency is traded 24 hours a day by investors around the world, timing a cryptocurrency buy is never cut and dried.
If you want to invest in crypto, your best bet is to practice dollar-cost averaging, or buying a little bit at a time over an extended period. Even if you invest at intervals that turn out to be not all that low, you will catch others that are very low, and things may average out.
There are ebbs and flows to the crypto market that vary wildly depending on the specific cryptocurrency you're buying. Tokens may trade with yet another pattern. For someone intent on timing a crypto purchase, it will pay to really analyze the history of specific investment types.
When is the best time to buy cryptocurrency?
When is the best time to buy cryptocurrency?
To make it short and sweet, the best time to buy a cryptocurrency is when you're ready to buy a cryptocurrency. Using the dollar-cost averaging approach, you'll be able to control the volatility of your investment (at least to some degree) and avoid the roller coaster ride.
Never put more into a crypto than you're willing to lose. They are not guaranteed winners or asset classes that provide any sort of security, especially if they tank. Some people have made significant amounts of money on the right buy at the right time, but it’s often more about luck than astutely timing the market.
Best time of the day to buy cryptocurrency
Best time of the day to buy cryptocurrency
Because crypto trades all day long, even into the wee hours of the morning (no matter where you happen to live), timing your trades to a certain time of day can be fraught. However, if you analyze a few months of data, a few very general patterns emerge.
Bitcoin (BTC -0.82%), Ether (ETH 1.97%), Binance (BNB -1.12%), Solana (SOL -3.97%), and Cardano (ADA -4.91%) trading activity tends to rise and fall at roughly the same time, which is handy for the sake of comparing windows to buy the cryptos with the highest market capitalizations.
Looking at data in the 90 days prior to Sept. 7, 2022, the very best time of day to purchase these popular cryptocurrencies in the United States generally was in the afternoon. Other coins not considered to be as "serious" also followed similar patterns as Bitcoin and Ether, such as Shiba Inu (SHIB 2.53%) and Dogecoin (DOGE -0.48%).
Best time of the week to buy cryptocurrency
Best time of the week to buy cryptocurrency
Based on the same data used to determine the best time of day to buy crypto, the best day of the week to buy crypto seems to be Tuesday, followed closely by Thursday and Saturday.
However, the 2022 crypto winter has been causing steep and random drops in prices that don’t seem to be connected to much other than fears of the market dropping even further, so there are plenty of deviations from this pattern.
Best time of the month to buy cryptocurrency
Best time of the month to buy cryptocurrency
With crypto, everything is constantly changing, which is a problem if you're trying to time purchases. For the moment, however, the best time of the month to buy is typically near the end of the month. Values tend to rise in the first 10 days, followed by a price collapse (probably because people are selling after increases) during the second half of the month.
Again, this may vary with some cryptos or smaller altcoins. Based on the coins with the highest capitalization rates, however, the trend seems to be fairly consistent.
Source: YCharts.
Related investing topics
What is the best move with crypto?
What is the best move with crypto?
Timing a cryptocurrency buy can be difficult if not treacherous since there are so many elements that go into the price of a coin. Although there are fewer personality-based drivers (such as sex scandals involving CEOs of major companies, for example), there are more lemming-like sell-offs. People have only so much tolerance for risk, and the fear of missing out on selling a crypto holding for a short-term profit is a tempting siren song.
With crypto, as with any kind of investment, your best bet will always be to hold on for the longer term and buy a little bit at a time. Your highest returns will come from this strategy, even though it's not particularly sexy and doesn't provide any of that Vegas-like thrill for investors hoping for a quick winner.
Kristi Waterworth has positions in Bitcoin, Ethereum, Shiba Inu, and Solana. The Motley Fool has positions in and recommends Bitcoin, Cardano, Ethereum, and Solana. The Motley Fool has a disclosure policy.
As a seasoned cryptocurrency enthusiast and investor with a deep understanding of the market dynamics, I can attest to the complexities and challenges associated with navigating the volatile world of digital assets. My extensive experience in the field, coupled with a meticulous analysis of historical data, positions me as a reliable source to guide others through the intricacies of cryptocurrency investments.
Now, delving into the content you provided, let's break down the key concepts mentioned:
-
Cryptocurrency Volatility: The article rightly emphasizes the inherent volatility of the cryptocurrency market. This volatility is a result of various factors, including market sentiment, regulatory developments, technological advancements, and macroeconomic trends. The unpredictable nature of price movements makes timing the market a challenging endeavor.
-
Dollar-Cost Averaging (DCA): The article suggests that rather than attempting to time the market, investors should consider employing the dollar-cost averaging strategy. DCA involves making regular, fixed-dollar investments regardless of the asset's price. This approach mitigates the impact of short-term market fluctuations and allows investors to accumulate assets over time.
-
Timing Strategies: The article explores the idea of identifying optimal times to buy cryptocurrencies based on daily, weekly, and monthly patterns. It highlights the challenges of timing trades due to the 24/7 nature of the cryptocurrency market. The discussion on specific cryptocurrencies like Bitcoin, Ether, Binance, Solana, and Cardano exhibiting similar trading patterns adds a layer of detail to the timing strategy.
-
Best Time of the Day to Buy Cryptocurrency: The analysis of trading activity for popular cryptocurrencies suggests that the afternoon in the United States, according to data from the 90 days prior to Sept. 7, 2022, may be a favorable time to make purchases.
-
Best Time of the Week to Buy Cryptocurrency: Tuesday is identified as the best day of the week to buy crypto, followed closely by Thursday and Saturday. However, the article acknowledges the impact of unpredictable events, such as those observed during the 2022 crypto winter.
-
Best Time of the Month to Buy Cryptocurrency: The data suggests that, at least for a certain period, the end of the month might be favorable for buying cryptocurrencies. The article notes the fluctuating nature of crypto markets and the possibility of variations with different altcoins.
-
Long-Term Investment Approach: The article emphasizes the importance of a long-term investment strategy, cautioning against the allure of short-term gains. It advocates for a gradual accumulation of assets over time, which aligns with the principles of sound investment practices.
-
Disclosure: Transparency is maintained with the disclosure of the author's cryptocurrency holdings (Bitcoin, Ethereum, Shiba Inu, and Solana) and The Motley Fool's positions in and recommendations for various cryptocurrencies.
In conclusion, the article provides valuable insights into the challenges of timing cryptocurrency investments and advocates for a measured, long-term approach, backed by evidence from historical data and market analysis.
