Bitcoin Investment: Timing The Market Entry

Bitcoin is prone to price volatility, with wide swings to the upside and downside. The most recent upswing comes alongside growing institutional demand for the cryptocurrency as an attractive asset class. Bitcoin's value has rallied over the last few quarters, increasing from about $26,000 in mid-September 2023 to an all-time high of around $73,000 in mid-March 2024.

Bitcoin is a fascinating asset. Simultaneously a transactional tool and a speculative commodity, it has attracted the attention of investors almost since it first hit the market. Unfortunately, it's also incredibly volatile. For that reason, while current market conditions are favorable for anyone considering buying Bitcoin, it is an asset you should purchase only at your own risk.

The best time to buy Bitcoin is whenever you’re ready to start investing. Don’t put more into your investment than you are willing to lose, and keep in mind the rule of dollar-cost averaging.

If you decide to invest, you should have an already diversified portfolio of assets like index funds. You typically don’t want to invest money in speculative assets you can’t afford to lose. Before you buy Bitcoin, think about what’s motivating you: do you believe Bitcoin has potential long-term investment value, or is it a case of FOMO?

Bitcoin's price volatility

Bitcoins Price Volatility

Bitcoin is considered a volatile asset. Volatility is a measure of how much the price of a financial asset varies over time. The volatility of an asset is important because it indicates the level of risk involved in holding that asset. The more volatile an asset, the more likely its exposure will be limited by investors.

Bitcoin's volatility is measured by how much its price fluctuates relative to the average price in a given period. The volatility of Bitcoin depends on what other cryptocurrencies you compare it to. For example, Bitcoin's volatility is higher than that of gold, which averages at around 1.2%, and other major currencies, which average between 0.5% and 1.0%.

The volatile nature of Bitcoin is due to the speculative nature of the cryptocurrency industry. Crypto investors bet on Bitcoin's price going up or down to make a profit, which causes sudden price increases or decreases.

Due to its volatile nature, it can be challenging to time the Bitcoin market. However, some experts suggest that the best time of the day to buy Bitcoin is early in the morning before the New York Stock Exchange (NYSE) opens, as values tend to rise as the day goes on. In terms of the week, Monday is considered the best day to buy Bitcoin, as prices are usually low following the weekend's low trading activity.

Overall, while Bitcoin's price volatility can provide opportunities for significant gains, it also comes with the risk of substantial losses.

The best time of day to buy

While there is no set rule for the best time of day to buy Bitcoin, there are optimal times that you can consider. Here are some insights to help you decide:

Volatility and Global Trading Patterns

The cryptocurrency market is highly volatile, and prices can fluctuate due to various factors such as news events, regulatory updates, economic indicators, and social media sentiment. Therefore, keeping track of market volatility and global trading patterns is crucial.

Time Zones and Trading Activity

The crypto market operates 24/7 across different time zones. Identifying peak trading hours in various regions and understanding how time zones and trading patterns overlap can help you find optimal windows for buying Bitcoin at more favourable prices. For example, increased trading volume may occur when American traders are ending their workday, European investors are starting theirs, and Asian markets are already active.

Daily Trends

Weekly Trends

Generally, cryptocurrency prices are lower at the beginning of the week, starting on Monday, and then rise throughout the week. Prices tend to drop over the weekend due to lower trading activity, making Monday the best day of the week to buy.

Monthly Trends

For now, the end of the month is considered the best time to buy Bitcoin. Prices tend to rise in the first weeks of the month and then collapse and trend downward through the end of the month.

Other Factors to Consider

When deciding the best time to buy, it's important to think about your personal schedule, investment goals, and risk tolerance. It's also crucial to stay informed about relevant news and market trends that can impact your investment strategies. Remember, the crypto market is highly volatile, so while these trends can guide you, they may vary from month to month.

The best time of week to buy

Bitcoin is traded 24 hours a day, seven days a week, and its price can fluctuate wildly. This makes it difficult to identify reliable patterns and choose the best time to buy. However, there are certain times of the week that are better for trading Bitcoin.

Bitcoin prices are lower when the market is less busy. Although you can trade Bitcoin at any time of day, the market is more active during typical work hours and less active early in the morning, at night, and on the weekends. Generally, Bitcoin prices start low on Monday and rise throughout the week. When the weekend hits, prices tend to drop until market activity picks up again the following Monday. Therefore, Monday is typically the best time of the week to buy Bitcoin, as it is likely to be at its lowest point following the weekend.

According to Alphabet's chatbot, Google Bard, Sunday is the best day of the week to buy Bitcoin, followed by Saturday. This is because trading volumes and volatility are typically lower on weekends, which can lead to lower prices. However, it's important to remember that the Bitcoin market is highly volatile, and prices can go up or down at any time.

To make the most of your investment, it's recommended to practice dollar-cost averaging, which means buying a little bit of Bitcoin at a time over an extended period. This helps to control the volatility of your investment and avoid a roller coaster ride of extreme highs and lows.

The best time of month to buy

Bitcoin is a volatile asset class that experiences frequent ups and downs. While it is impossible to time the market perfectly, there are some trends that can help you decide when to buy.

End of the Month

According to some sources, the best time to buy Bitcoin is towards the end of the month. Prices tend to rise in the first week or ten days of the month, then collapse and trend downwards through the end of the month. This pattern is not guaranteed, but it has been consistent for coins with the highest capitalisation rates.

Start of the Month

Other sources suggest that the start of the month is the best time to buy. Bitcoin's price chart for 2021 shows that the first ten days or so tend to bring the bulk of the gains. This was particularly true in 2021, a very bullish year for Bitcoin.

Other Factors

The best time to buy Bitcoin also depends on your investment strategy and risk tolerance. If you are a long-term investor, you may be better off adopting a dollar-cost averaging approach, buying a little each month to 'average out' volatility.

If you are a short-term trader, you should pay attention to daily and weekly trends. For example, prices are usually lowest on Monday morning and rise throughout the week, so Monday is a good day to buy.

You should also consider the broader market conditions. For example, negative media reports or interest rate hikes can suppress Bitcoin's price, creating a buying opportunity.

Final Thoughts

Ultimately, the best time to buy Bitcoin is when you are ready to invest. Do not invest more than you are willing to lose, and remember that buying during periods of low prices can help you maximise your returns.

How to invest in Bitcoin

Step 1: Choose a Crypto-Trading Service or Venue

You can purchase bitcoin from a cryptocurrency exchange, such as Gemini, Kraken, Coinbase, Crypto.com, and others. These exchanges offer a range of cryptocurrencies and carry different fees and consumer protections, so it is important to research which platform best suits your needs.

Step 2: Connect Your Exchange to a Payment Option

Depending on the exchange, you may need to provide personal identification and payment details. Most exchanges allow you to connect your bank account directly or link a debit or credit card. It is important to note that credit card processing can result in extra charges, and some exchanges and banks may question or stop deposits to crypto-related sites.

Step 3: Place an Order

Cryptocurrency exchanges offer various order types and ways to invest, including market and limit orders, and sometimes stop-loss orders. You can also set up recurring investments to dollar-cost average into your chosen cryptocurrency.

Step 4: Safe Storage

It is important to safely store your Bitcoin in a digital wallet. There are two main types: hot wallets and cold wallets. Hot wallets are apps on internet-connected devices, such as computers or phones, and are best for small amounts of cryptocurrency or crypto that is actively trading. Cold wallets, on the other hand, are offline devices, such as USB drives, that are considered more secure and are best for long-term or large cryptocurrency holdings.

Step 5: Timing Your Purchase

The best time to buy Bitcoin depends on various factors and strategies. Generally, cryptocurrency prices are lower when the market is less busy, such as early in the morning or on the weekends. Prices also tend to be lower at the beginning of the week and rise throughout, so Monday is typically a good day to buy. Additionally, towards the end of the month is a good time to buy, as prices tend to rise in the first weeks and then collapse and trend downward.

However, it is difficult to time the volatile cryptocurrency market, and choosing the right time to buy can be challenging even for experienced investors. It is crucial to consider your risk tolerance and investment strategy and only invest what you are willing to lose.

Frequently asked questions