Cryptocurrency in general, but particularly Bitcoin have gained massive traction in recent years and there’s been an influx of new people interested in buying and owning the digital currency. Let's explore the interesting commonly asked question of "what is the best time of day to buy Bitcoin?"
But some questions should always be asked before buying something and one of the most important is “When do I buy?” The rule of thumb is that you should buy low and sell high. Indeed, that’s a very good decision, but what is low and what is high?
Before deciding to invest, it’s necessary to get familiar with the main factors that influence the price of the asset. A top-down analysis is usually a good choice and it implies looking at the broader picture before focusing on the factors that specifically influence Bitcoin or any other coin that you are looking to buy. Next we will outline some of these aspects but keep in mind this is a non-exhaustive list:
Various media portals cover Bitcoin and altcoins extensively, thus finding information shouldn’t be too hard. The global political and economic environment can also influence the price of all cryptocurrencies, so you will need to pay attention to that as well.
Look for any particular upcoming Bitcoin events
For example, just recently (May 11th, 2020), the Bitcoin halving took place, meaning that reward per mined block went from 12.5 BTC to 6.25 BTC. Events such as this one can have a big impact on Bitcoin price, thus if something big is coming up, it would be safer to just wait and see how the price reacts. And this is not limited to Bitcoin only. For example Binance Coin (BNB) is regularly “burned” and each burn impacts supply (it decreases it), which in turn affects BNB price.
Coin forks are another important event and usually the owner of a cryptocurrency that’s about to fork will receive an amount of the newly created coin. Example: if you own 10 ABC coins, after the fork you will own 10 ABC coins plus 10 ABCD coins (where ABCD is the new coin created by the fork). Although there have been several Bitcoin forks, there is none expected at the time of writing but it’s always a good idea to check before buying Bitcoin.
Beware of market manipulation
The crypto market is still very young, which means it’s more easily manipulated than the Forex market. It’s true that Bitcoin’s high market cap makes it less likely to be manipulated but just a few short years ago, when the ICO (Initial Coin Offering) craze was in full swing, price manipulation was a rather common occurrence, especially for low cap coins. Bottom line: if you are looking to buy cryptocurrency, stick to the “big boys”, the coins that cannot be manipulated as easily.
Always check trends
Before purchasing your Bitcoin, it’s very important to decide whether the market is in an uptrend (bullish) or in a downtrend (bearish). If the market is bearish, you may want to postpone your buying until you see clear indications that a bottom has formed and that price has started a healthy climb.
Choosing the Day
After checking the general factors highlighted above. It’s time to choose the right day. Of course, an exact day of the week cannot be pinpointed with accuracy but generally speaking, people are wired to take a break during the weekends and this means that usually, on Saturdays and Sundays the demand for Bitcoin is lower.
Following the rules of Supply and Demand, when the latter is lower, price goes down (if people don’t want something, it becomes cheaper). Following that train of thought, after taking a break on Saturday and Sunday, people get back to work on Monday and activity resumes its normal course, thus demand may increase.
Keep in mind that we are not only talking about regular people who buy a bit of Bitcoin to HODL it; we are also talking about day traders who move a lot of cryptocurrency on a daily basis and the so-called “whales” (big players) who move massive amounts. Most of these guys are taking a break during the weekends.
Although it’s not confirmed, there is also a theory according to which cryptocurrency demand increases at payday. It makes sense for a person who is looking to buy crypto to do so when the pay check comes in but then again, these are retail investors so their impact on the market is not substantial. Either way, it’s worth keeping an eye on this to make sure that you don’t buy when demand is high.
Choosing the Time of the Day
To say that the crypto market is volatile is probably an understatement. Over the last 7 days (at the time of writing), Litecoin posted a positive change of over 13.00%, EOS increased more than 11.00% and Bitcoin added 2.34% to its price. Of course, Bitcoin is the undeniable “King” of crypto, with a market cap that vastly surpasses the next in line (Ethereum), so its price is generally speaking more stable when compared to other cryptos. To put that in perspective, you should know that EUR/USD, one of the most traded Forex pairs moved just 0.30% over the same period.
Even during a 24 hour period, Bitcoin can show wild swings. Just take a look at the following chart to understand it better:
On the 17th of August at 9:00 AM, Bitcoin was trading at $11,800 and by noon it had reached a peak around $12,400. And all this happened in just a few short hours! However, less than 24 hours later, it dropped to $11,800 and even lower in the following hours. As you can see, timing is of the essence because you don’t want to overpay and then see your investment drop in value.
But the example above is just that – an example – not a recommendation to buy Bitcoin at 9:00 AM or to sell it at 12:00 PM because the best time cannot be determined with accuracy due to the many factors that influence the price of cryptocurrencies in general and Bitcoin in special.
The best thing you can do is to take into account all the dynamics of crypto price movement and watch charts on a regular basis because time-based patterns can change from one week to another or even from one day to the next. For example, you can notice that this week a good time to buy is at noon but the next week, it can shift to late at night.
World Problems and Crypto Price
The stock market and even the Forex market are clearly influenced by global problems such as the COVID-19 pandemic but also by the monetary policy adopted by central banks such as the ECB or FED. Usually, in times of crisis the markets are going down and yet, Bitcoin is one of the best performing assets of 2020.
Considering this, we could even say that cryptocurrencies gain momentum in time of economic instability, being seen as safe havens, which are unaffected by the factors that can destabilize fiat currencies. However, keep in mind that market sentiment can quickly shift (a safe haven today can be considered a risky asset tomorrow) and rumours can affect crypto price just as fast as they can affect fiat currency price.
Final Advice: DYOR
Do Your Own Research because no one can tell you exactly when you should buy Bitcoin. Should you do it today? Tomorrow? Two hours ago but you missed it? The best time is after you’ve done your “homework” and are familiar with all or most of the factors that can influence crypto price.
Decide if the digital asset you are looking to buy is in a bullish phase or if the overall market sentiment is bearish. Find a good crypto news portal and go through the latest updates. Last but not least, learn basic price analysis, concepts like Support and Resistance, trends, technical indicators, etc. And probably the best advice we can give you: Never invest more than you can afford to lose!
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