Cryptocurrency trading poses several challenges to traders. Crypto traders need every edge they can find when trading since these digital assets do not provide any security. Some traders have won big, while others have lost significant amounts of money from their trades; this can be attributed to the trader’s choice of when they make their trades. The trader’s ability to properly time the market is thus crucial if a trader wants to rely on something other than sheer luck. This guide will help you decide the best time to make your trades.
The market that never sleeps
Unlike traditional markets, the crypto market runs 24/7. Despite the market being open nonstop, there are times when there are substantial trade volumes and when the volumes get pretty low. Crypto trading may also be affected by traditional financial institutions, which are closed during the weekend and public holidays; this thus causes the crypto market to dip during the weekends. The ceaseless nature of the crypto market makes it difficult to determine the time to make your trade. However, with analysis from previous months, a trader can obtain a market trend that they can use to best time their trades.
Liquidity of the market
Liquidity is the ease at which a trader can trade a crypto asset without significantly impacting its market value. Maximum liquidity is achieved when the trade volumes are high, corresponding with low volatility. Low volatility means the asset’s price stays mostly the same with time. Investors who consider themselves risk-averse or those who cite market risk as a reason not to invest in the crypto space can do so when the market’s liquidity is at its maximum. Maximum liquidity means the market is relatively stable, allowing the investor to estimate his profit margins accurately.
As stated earlier, crypto trades tend to be lower during the weekend, resulting from the influence of traditional financial institutions; this means that the markets are likely to have the least liquidity during the weekends and, thus, highly volatile. Investors looking to make large buys and sales must do so when the market has maximum liquidity.
Transaction fees
Transaction fees such as Ethereum gas fees can change dramatically within a short petimeTraders should take note of these fees, especially if they have small portfolios, because these fees are affected by the network congestion rather than the size of the trade. Small traders are likely to be more affected since the fees can end up being twice the size of the transaction, which is not profitable. It thus shows how vital it is for a crypto trader to know when to make their trade.
Traders realized that busy hours resulted in expensive fees, and some decided to make their trades during the less active hours, such as midnight. However, this turned the tables, causing the formerly less active hours to become more active and thus more expensive.
External influence
Influential celebrities in the crypto space, such as Elon Musk, must be considered when deciding the best time to make your transaction. Their statements, let alone actions, can change the course of the crypto market. Government announcements regarding crypto can also cause influence the crypto current and future market trends. Investors in the crypto space should make it a point to remain conversant with what the whales in the crypto space are saying.
High-profile celebrities use social media accounts like Twitter to sow the fear of missing out. The lack of regulation and the ceaseless nature of crypto makes the prices easy to manipulate. An endorsement from Elon Musk and such celebrities has been seen to easily cause an asset’s price to soar along with its trade volumes. However, Elon Musk’s influence seems to be diminishing with time, and hopefully, with more innovation and regulation, the crypto market will continue to mature.
Average trading hours
Even if the crypto market is open 24/7, the market has firm trading hours, which are helpful when analyzing to determine when to make your trade. Typically the peak market trading hours range between 8:00 am to 4:00 pm local time. However, news and speculation can cause considerable movements in the market away from trading hours.
A trader can use the market time converter, translating global markets’ opening and closing times to correspond with your local time. Different news affects different markets differently. For instance, news affecting a specific coin might cause shockwaves in the American market, but that is not quite the case in Japan. A trader can take advantage and reap big rewards.
Best time to make your crypto trades
Generally, it’s best to buy cryptocurrency early in the morning before the stock markets open; the values tend to rise throughout the day. However, it’s essential to pay attention to the daily fluctuations of the different coins and make relevant decisions. Considering a week, Mondays tend to have low prices, which then rise throughout the week. Mondays are thus the best day of the week to buy crypto, while Fridays are the best day of the week to sell.
Understanding the trends for the month requires more patience. Just like days turn into weeks and weeks to months, experts believe that crypto prices tend to rise at the beginning of the month and lower towards the end of the month; this means that the best time to buy crypto is at the end of the month. Investors should consider the volatile nature of the crypto market; trends obtained in one month can be completely different the following month.
Conclusion
The best way to ensure success in crypto is to choose a strategy that works best for you. Timing crypto can be brutal but worthwhile; there are many factors to consider when deciding the best time to make your trade. Being thoroughly involved in crypto and analyzing market trends for a while before you dip your toe in the crypto space can help immensely. The bottom line is that the best time to invest in crypto is when you feel ready. Due to the volatile nature of crypto, the investor should only put in as much as he is willing to lose.