Cryptocurrency

When to Buy and Sell Bitcoin: An Investor’s Timeline

There are about 46 million Americans who own bitcoin. On top of these individuals, there are companies, investment funds, and nations like El Salvador that also own significant amounts of bitcoin.

As a decentralized, digital currency, bitcoin has been exploding in value over the past few years. Buying and holding bitcoin long-term has built some serious wealth for many thousands of people.

But holding isn’t the only way to profit. Short-term traders, looking to buy low and sell high are also doing very well.

Wondering when to buy and sell bitcoin, so you can make immediate profits from this ever-fluctuating asset? We cover the best time to buy bitcoin and sell for a profit down below.

Why Buy and Sell Bitcoin?

Most people want to earn extra money. But most people don’t want to drive for Uber or work overtime at their job. So instead they turn to the crypto markets.

There are countless ways to make money in the crypto market. From staking your assets to lending them out for interest, to the wonderful world of Defi, and everything in between.

But one of the most prominent ways of making money is trading. Trading, as opposed to investing, is the process of buying an asset like bitcoin when the price is low, waiting for it to increase, and selling for a profit. You get to pocket the difference.

Millions of people trade stocks, forex, commodities, and other assets every single day. But many are turning to crypto, thanks to its huge volatility. Markets can move dramatically in short time periods, creating countless opportunities to trade. 

For example, bitcoin can rise or fall 15% or more in a day, while forex currency pairs might move the needle 1% on a crazy day. The more movement that an asset makes, the easier it is to make noteworthy trades. And if you get good at timing the market, you can stand to make some serious profits.

When to Buy and Sell Bitcoin

Wondering when to buy bitcoin? The best time to buy is when it reaches its low point, also known as the support level. And the best time to sell bitcoin is when it reaches the top of the current market, otherwise known as the resistance level. 

But let’s set the record straight; no one can time the market. While millions of people trade every single day, they will never know when assets hit the bottom or when it hits their peak.

The good news is that you don’t need to be perfect. You don’t have to define the exact bottom point for bitcoin, nor do you need to know when bitcoin reaches its next peak. You just have to have a pretty good idea of when it’s going up, and when it’s going down.

You can ride the waves and still earn a pretty penny. 

Nonetheless, there are many ways you can increase your chances of making profitable trades. By learning about the crypto market, and all the internal and external factors that affect the price of bitcoin, you can anticipate moves and trade accordingly. 

Factors That Effect Bitcoin Volatility

When looking to time your buys and sells, to ensure you are always making gains and minimizing losses, you need to pay attention to a lot of factors. There are tons of things that affect the price of Bitcoin. Here’s what you’ll need to watch when you develop your bitcoin investment timeline.

Global News

One of the biggest factors affecting the volatility of bitcoin’s price is the state of the globe. Since bitcoin is decentralized, it isn’t dependent solely on news reports coming out of the US or other developed, western nations. Rather, bitcoin takes everything into account.

For example, China has been experiencing tons of financial and crypto turmoil in recent months. The Evergrande scheme has caused much economic instability, which has been holding the price of bitcoin by a thread.

A tumble of Evergrande could create a rollercoaster ride for bitcoin.

The recent announcement of the Omicron variant crashed the crypto market, causing bitcoin to drop by 20% in November 2021, just weeks after a new all-time high.

On a global news scale, bitcoin represents the entire cryptocurrency market. And this $3 trillion market is affected by activity in nearly every nation. 

Stock Market

The price action of bitcoin leads the crypto market. Depending on what bitcoin does, most, if not all, altcoins will follow suit.

And bitcoin is heavily influenced by activity in the stock market. So if the stock market experiences a crash, then bitcoin will likely follow suit pretty quickly.

Likewise, if stocks start to skyrocket, bitcoin will as well, as investors feel bullish about the entire market. 

But when it comes to bitcoin, the price action is much more intense. A 5% crash in the stock market might be a 20% crash in the price of bitcoin. But the gains could produce outsized returns as well. 

Crypto News

Of course, we can’t forget about crypto-specific news. There is tons of activity every single day, across the world, and across many different blockchains that are affecting the price of bitcoin.

From the development of new use cases for crypto to nations like El Salvador making bitcoin legal tender, bitcoin-related news is non-stop. 

It can be difficult to keep up with all of the different headlines in the crypto-sphere. The best thing you can do is subscribe to the best crypto news site, where you can get all of the most important information in one location. 

Essentially, good news coming out of the crypto world can mean the price of bitcoin will rise, while bad news will do the opposite. And the early you can trade based on these news events, the higher your chances are of making a profit. 

Technical Analysis

Trading based on real-world events, such as the latest news headlines, is known as “fundamental analysis.” But there is an entirely different world of trading known as “technical analysis.”

Technical analysis is the process of looking at the past price action of an asset like bitcoin, to help predict future price action. Most assets follow basic patterns.

By using complex charting software, you can actually map out past price patterns, figure out what patterns trigger price gains or losses, and make trades accordingly.

Technical analysis requires commitment, lots of time spent looking at charts, and a mathematical and analytical mind. 

The benefit of technical analysis is that it can be used to make profitable trades, even when there aren’t any news events that are causing a swing in the prices. 

Influencers 

One of the beautiful aspects of cryptocurrencies is that they are decentralized. That means there is no power or authority or team that can devalue a cryptocurrency, inflate it, or otherwise mess with its value or supply.

However, those with a loud enough voice, and with enough followers, can send some ripples into the price action of crypto. Just look at people like Elon Musk.

The richest man in the world has over 65 million followers on Twitter. Most of these followers have an appreciation for tech, entrepreneurship, and crypto.

On a few occasions, Elon has tweeted about various cryptocurrencies, like Shiba Inu. In response to these tweets, the price has been known to pump in a very short time period.

Likewise, if Elon or Tesla announces that Tesla is adding more Bitcoin to their balance sheet, that could provide upticks in the market.

By figuring out who these key influencers are, even if they aren’t crypto-native influencers, you can follow along and buy or sell according to what they share. 

Whale Activity

Whales are the individuals and large institutions that hold or buy significant amounts of bitcoin. Their holdings are enough to impact the price of bitcoin.

For example, if a whale held 100,000 bitcoins, selling them all at once could devastate the current price of bitcoin, as higher selling pressure leads to lower prices. 

For the most part, whales are anonymous, thanks to the nature of the blockchain. The only thing reported is the wallet address of those who hold or buy large amounts of bitcoin.

While you can’t figure out who exactly is holding all of that bitcoin, you can watch that wallet’s actions. If a whale were to move their bitcoin holdings from an external wallet to a cryptocurrency exchange, that would signal a big selloff, meaning the price is about to drop.

Wondering when to sell bitcoin in this instance? Either you’d want to hurry and sell your holdings before the price plummets, or wait until it falls so you can buy the dip. Or do both. 

Learning to Trade

So if you want to make money with bitcoin and other cryptocurrencies, the most popular method is through short to medium-term trading. Trading can be summed up by buying low and selling high.

Learning how to time the markets is incredibly important as a trader. And now that you know when to buy and sell bitcoin, based on all of the factors listed above, you have what it takes to get out there and test it for yourself.

Just make sure to trade with money you can afford to lose, since trading, and investing in crypto, is inherently risky.

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