Crypto: Timing Your Bitcoin Investment Effectively

Crypto - Timing Your Bitcoin Investment Effectively

Over the last two weeks, cryptocurrency prices have plummeted. While dropping prices may lead investors to be concerned, they can also provide excellent purchasing opportunities. This is especially true for higher-priced investments, which can be made more accessible by purchasing during a slump.

So with the crypto market in freefall, it may appear that now is a good moment to invest. Hmmm…do not despair, this article will guide you in the decision-making process timing your purchase efficiently.

When is the best time to buy?

In theory, it makes sense to buy bitcoin while they are cheaper and then sell them when they reach their peak. This, however, is significantly more complicated than it appears. It is extremely tough to time the market, and it’s much more difficult with cryptocurrencies because these assets are far more volatile than ordinary stock.

Cryptocurrency values have been on a whirlwind, making it nearly hard to pick the best time to buy. If you buy now because it appears that prices have reached a low, there’s a risk they’ll fall even more, and you’ll have invested too soon; meanwhile, if you wait too long, prices may surge, and you would have lost out.

Buying good investments and holding them for the long haul is the best way to make money in the stock market. If they’re truly good investments, they should appreciate over time, and their prices should rise in tandem. With cryptocurrency, the same concept applies. It doesn’t matter if you buy when Bitcoin is $70,000 or $10,000 per token, provided you believe cryptocurrencies have a promising future, you’ll make a tidy profit regardless if it ever reaches, say, $400,000 per token.

One method to reduce price volatility is to use dollar-cost averaging, which enables you to invest a fixed amount of money regularly. Say, once a quarter or once a month. When prices are high, you will purchase, and when prices are low, you will invest. Those fluctuations would typically even out over time, thereby assisting in mitigating the impact of market volatility on your assets, and you won’t have to worry about timing your purchases.

Irrespective of when you decide to buy, keep a long-term perspective in mind, as no one knows whether bitcoin will thrive, but if it does, you increase your profits.

The Author

Ajisebutu Doyinsola

Doyinsola Ajisebutu is a journalist and prolific writer who takes a special interest in Finance, Insurance, and the Tech world.