Is There a Best Time to Buy Cryptocurrency?

Is There a Best Time to Buy Cryptocurrency?

Reading time: 6 minutes 

Investor fascination with cryptocurrencies is far from over. Since Bitcoin’s (BTC) emergence in 2009, the crypto market has grown immensely and is currently valued at over USD 2.31 trillion. There are now over 20,000 cryptocurrencies (or ‘altcoins’) traded on 100s of exchanges worldwide. In addition, the US, EU, UK, and various Asian countries are now attempting to regulate digital currencies, demonstrating that what was once considered an obscure asset class on the fringe of the financial system has the potential to revolutionise the way we conduct our finances. 

What Affects Cryptocurrency Price?

Despite their unique nature, cryptocurrencies do not exist in isolation. Like all currencies and assets (such as stocks and bonds), cryptos’ value is affected by global financial factors, like economic growth/contraction, inflation, rising interest rates, unemployment and regional conflicts.

More crypto-specific events – such as the BTC Halving, which takes place every four years – have also historically been proven to impact cryptocurrency pricing trends. Although it is widely accepted that past Halvings had placed upward pressure on Bitcoin’s price, the latest Halving, which took place on 20 April this year, is somewhat unprecedented. As BTC was already experiencing an upward trend leading up to it, the market is still waiting for the Halving’s effect to materialise. 

Best Time of Day to Buy Crypto?

Although crypto is traded 24/7, investors usually find the best times of the day to trade are when liquidity is high; these are typically exchange hours – think the London Stock Exchange (LSE) and the New York Stock Exchange (NYSE). 

Trading activity usually increases around the exchange opening and closing times. The value of an asset during a specific time is also affected by on-the-day announcements, such as market news and geopolitics, as prices tend to rise/fall in correlation with investor sentiment and anticipation. 

It is recommended to analyse data to identify what trends emerge during specific hours, initially paying attention to cryptocurrencies with the highest market capitalisations, such as Bitcoin, Ethereum (ETH), Litecoin (LTC) and many others. 

Best Time of the Week to Buy Crypto? 

As you begin to notice the time of day most activity occurs, you will be able to determine weekly patterns, i.e., the days that most trading activity occurs. Usually, prices drop when the market is less busy as trading volumes are lower. While cryptos are traded 24/7, activity generally decreases during the weekends when all major stock markets are closed. Hence, the better times of the week to trade are likely when stock markets are active.

According to FP Markets Analyst Aaron Hill, ‘The correlation between stocks and cryptos is clear, particularly for companies that employ the use of crypto in their primary operations. Therefore, it’s plausible that some stocks tend to follow suit when cryptos dip or consolidate’.

Best Time of the Month to Buy Crypto? 

Identifying the best time of month to invest in crypto is challenging. Once you have familiarised yourself with daily and weekly pricing trends, you may notice what happens in the long run. 

Since cryptos are highly volatile assets, be diligent, observe market fluctuations, and educate yourself. According to Hill, ‘The main methods for analysing the crypto market are technical analysis and fundamental analysis. This applies whether you are day trading the market or a longer-term position trader’. 

Whereas fundamental analysis will look at internal (for example, BTC Halving) and external factors (such as regulatory updates and macroeconomic data) that may affect a cryptocurrency’s price, technical analysis focuses on historical price movement and historical patterns. Analysing past data and comparing timeframes can reveal emerging trends and patterns that you can use to guide your trading. For example, you can look at trend studies focusing on the swing highs and lows or support and resistance.

Is There a Best Time to Trade Crypto?

To summarise, there is no straightforward answer to the best time to buy cryptocurrency. 

Timing a trade is always challenging, and various factors must be considered when determining your investment strategy. This is where backtesting a trading approach can help, as this will highlight what markets are best suited to your methods and will help highlight the best days and times to trade.

FAQs 

1. What is Cryptocurrency? 

A cryptocurrency is a digital currency that uses blockchain technology to secure transactions, control the supply and secure transfers.  

2. How can I Buy/Sell Cryptocurrency? 

While buying cryptocurrency on a crypto exchange may be difficult due to high costs, you can open an account and trade the top 5 cryptocurrency CFDs (Contracts for Difference) – Bitcoin, Ethereum, XRP (Ripple), Bitcoin Cash (BCH), and Litecoin – with FP Markets. You do not need a digital wallet and are trading with a regulated broker; you can also trade in rising and falling prices. 

3. What are Crypto CFDs?

Crypto CFDs are contracts that track the underlying price of an asset without you having to own the underlying asset. 

4. What is the Best Time to Buy Cryptocurrency? 

There is no best time to buy cryptocurrency. Conduct research using reliable tools, considering your risk tolerance, trading style, overall trading approach and general market sentiment.