Correct Entry and Exit: Good Timing Required: When to Buy Bitcoin and Crypto | news

Crypto trading characterized by high volatility and extreme price swings
Trading is increasingly based on Wall Street trading hours
Avoid weekend trades

Cryptocurrencies are known for the high volatility that accompanies their trading. The reasons for price drops or spikes are often difficult to predict, as in the past a single tweet from Tesla boss Elon Musk was enough to trigger double-digit price swings (in either direction) for Bitcoin & Co. In addition, the price movements of digital currencies are often more extreme than in the stock market. Double-digit losses or gains in a short period are not uncommon, which makes it all the more difficult to know when the right time to buy or sell cryptocurrencies has come. Nonetheless, the stats give some clues as to the rough benchmarks a trader can follow to get the best possible time for crypto trading.

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Similar to a gemsehndler in the weekly market, it is also important for a crypto trader to find when market liquidity and trading volume are as high as possible. While liquidity is less of a concern for those who only wish to invest small amounts in cryptocurrencies, exchange portal CoinDesk recommends using more established crypto platforms as these applications are more secure against manipulation or the effects of large buy or sell orders.

Moving from Asia to the United States

But when exactly is the most traded in the markets? In the past, the crypto market was particularly geared towards Asian markets. The reason for this is that Bitcoin & Co. was mined especially in Asian countries and cybercurrency trading also gained momentum here much earlier. As Mati Greenspan, CEO of Quantum Economics, comments to CoinDesk, “During the 2017 rally, the sunrise in Japan was a big thing for the price of bitcoin.” Chinese New Year has also been feared by crypto bulls in the past, according to DerStandard, there have been price losses for years because cash gifts are often given during celebrations, which is why investors are increasingly separating from their crypto investments.

However, this trend has since disappeared. The background is the relocation of the crypto market from Asia to the United States. China, in particular, is taking cryptocurrencies harshly to court: honing and trading in cybercurrencies is now banned there. On the other hand, Western institutions have now opened up to Bitcoin & Co. Cryptocurrencies are now considered a lucrative, albeit high-risk, investment and sometimes find their way into the portfolios of major investment banks.

This can also be seen from the cryptocurrency trading volume. According to DerStandard, this reliably increases at the start of Wall Street trading and peaks between 3:30 and 4:00 p.m. Central European Time. On the other hand, the volume of transactions at the close of the American markets (22:00 CET) is rapidly decreasing. As Coin Metrics tells CoinDesk, this correlation was strongest in the first quarter of 2022. If you want to trade Bitcoin, you should definitely keep these times in mind.

Better not to trade on weekends

Unlike exchanges, crypto trading does not rest even on weekends. Nevertheless, crypto trader and market analyst Cantering Clark advises CoinDesk to refrain from trading Bitcoin & Co. on weekends. Thus, lower trading volume would make the crypto market more vulnerable to manipulation: “Weekends in legacy markets such as forex have always been thinner. The same can be seen in crypto, which is why it has been so for a long time that the prevailing view is that all weekend activity is bad and unsustainable Never trusting the weekend is something to keep in mind”.

DerStandard also used BitcoinMonthlyReturn data to determine that since 2010 the price of Bitcoin was generally weak in September and March, while according to statistics it was most likely to show gains in April, May, October and November. Nevertheless, these statistics are not reliable indicators of future profits, especially since the original cybercurrency is still quite young, i.e. the data situation is still quite manageable.

Strong fluctuations in gas prices

Finally, trading with DeFi currencies such as Ethereum should be discussed. This is where transactions are subject to what is known as gas fees, which fluctuate greatly depending on current network usage. Anyone who trades only small amounts but makes a transaction at an inconvenient time can very quickly face fees that even exceed the amount traded. It is therefore all the more important to have a good entry and exit point here. Here, too, it is worth taking a look at the statistics. As Connor Higgins, data scientist at Flipside, explains to CoinDesk, “If we break down the fees down to the hour, we see fewer but larger transactions around midnight ET. [Eastern Time, 5 Uhr morgens MEZ, Anmerk. d. Red.]and more activity around 5 p.m. ET [22 Uhr MEZ, Anmerk. d. Red.]which has long been the most expensive time to transact.”

However, this has now evolved to the point where more market participants would try to take advantage of less active times to trade, which in turn would lead to higher fees during what were perceived to be more favorable times. However, according to data analytics company Nansen, one could also observe here that trading volume on the two largest crypto exchanges, Coinbase and Binance, would increase during US exchange trading hours.

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