When Should You Buy Crypto?

when you should you buy

If you are reading this. You are not alone in wanting to capitalize on the blockchain wave which is moving through the world. Unfortunately, even though crypto prices have been dropping, it can be difficult to find a good entry point for building up your stack of currencies.

In this article,  we will look at our current market and make some predictions based on current conditions. After we review the data, we will follow that information with a discussion of how you should structure your entry and exit strategies to get the most out of hopping into crypto right now.

Averages Are Just Averages

In buying when buying at the peak of the market,  your absolute average price will be very high. In selling at the peak, you will receive a slightly lower price than if you had sold in January. However, this does not mean that it is a good idea to sell now! 

The averages are skewed by a handful of lucky investors who were able to get in early and cash out before crypto prices exploded. 

If you enter with a solid strategy and win against other players in the same boat as you, then you will likely come out ahead regardless of what the general market direction may be.

Predicting Crypto Prices

In order to make a good decision about when to buy, we need to know what the market is going to do. In this section, we will look at some useful guides for making predictions about crypto prices and see if they are accurate enough for you to use in your own decisions.

Fundamentals

Fundamentals are a good way to predict prices. The coin you invest in must have a use case, a decent team behind it, and a strong community of users whom the cryptocurrency serves. If these things are present, then there is a good chance that over time the price will rebound from its current lows. 

However, history shows that even if the fundamentals are sound, cryptocurrencies can still lose up to 90%+ of their value without ever recovering. So do not rely on fundamentals alone! This is especially true for high market cap coins which may be manipulated by large holders who don’t want to see substantial increases in prices until they exit with substantial profits.

Technical Analysis

Technical analysis is a useful tool for predicting crypto prices. Like in traditional markets, price charts can help you make good decisions about when to buy or sell. They are especially useful for coins with low trading volume or ones that have no fundamentals since their success is determined entirely by market sentiment.

However, technical analysis is not an exact science either! Many traders use patterns based on historical data which may be distorted by coin age (how long the coin has been on the market) and whales who can pump or dump a cryptocurrency at any time. If you are using this method to guide your trades, do so while keeping these factors in mind. 

Another thing to keep in mind is that some high-performing cryptocurrencies tend to enjoy 70-80% gains without ever retracing once they start climbing. So if you believe in a cryptocurrency and its market is trending upwards, it may be best to sit on your coin and wait for the increase to happen.

Sentiment Analysis

Sentiment analysis is based on trying to discern what people say about a certain coin online. For example, if we look at sentiment about bitcoin we will see that people tend to tweet or post positive things about bitcoin when they are talking about buying more of it. 

Sentiment analysis can help us determine where the market is going and how feel about different coins like bitcoin, ethereum, etc. If we look at the sentiment of posts and tweets about bitcoin, we can see that most people are still optimistic about bitcoin prices going up in 2022 while some people think it might crash to $20,000.  

Some newbies have also entered into the crypto market and have never even seen a 70% drop in their investments so they don’t know how to react when the price drops that much.

So if you want a sure-shot way to make money from crypto trading & investment then there is no other way except doing it with proper research on which coin is good for investment and prediction of prices based on real-time data. But don’t forget you must be correct in your prediction of the prices and make huge profits from it.

How Can You Capitalize On These Factors?

You can either invest in a coin with good potential to increase in price or buy options and futures of coins that you think might be potentially profitable. You can also go short on coins that have high marketcap but which you think might drop soon due to not having any real use case and very little community support behind it. 

Remember, your profits cannot exceed your losses. So don’t put all your eggs in one basket! Make sure you diversify your portfolio so that you are not hit hard if any particular cryptocurrency goes down in value or fails completely. Also, try using limit orders instead of market orders so the prices do not move by more than 5-10% up or down during your trade.

This way you can minimize your risks and maximize your rewards even if you are still getting started. 

Thinking Long Term

Even though crypto markets are known for their rapid ups and downs, the fact that they are decentralized means that prices will likely continue to rise as more people adopt them. Over the long term, it may be a good idea to invest in cryptocurrencies, despite all of their risks. 

This is because once bitcoin becomes regulated or accepted by governments everywhere, it has the potential to go up very high over time making huge profits for its investors!

A lot of projects are currently under development which promises to create infrastructure and ease of use so one can utilize cryptocurrencies not just for trading but also as an everyday currency like we do with paper money today. 

How Does the Metaverse Affect This?

Another thing to consider is the growing fascination with the Metaverse. In an inconventional, virtual world, it would not make sense for fiat currencies to be used when buying virtual assets. 

For this reason, cryptocurrencies are the perfect option for creating a standard currency in the 

Metaverse that people can use to buy or sell items without having to go through fiat currencies which slow down transactions times because everyone has different banks with slightly different requirements.

If you want to keep track of which cryptocurrencies are doing well, it might be a good idea to look at what is trending on Twitter and other social media platforms as sentiment analysis can help you determine if there will be an increase or decrease in price for any particular coin. 

While there is nothing guaranteeing that bitcoin will continue its success story, looking at the analysis done by others can help you make your own decisions.

There may not be many opportunities where we see such explosive growth of a commodity in such a short period of time. 

Final Thoughts on When You Should Buy Crypto

It is possible for us to make money from crypto as long as we know what we are doing and have enough knowledge about it which usually takes time. Some people can still make mistakes even after learning a lot because they may not be able to take those lessons in the future and adjust accordingly.

Only invest what you can afford to lose! It’s also very hard to determine if cryptocurrency will still be around in the next 10 – 20 years but it’s best not to sell them all at once or keep buying more expecting that it will go up tomorrow, this week, or even next year.

Never buy into hype over cryptocurrencies until you have made your own thorough research on whether the coin has potential or it’s just a scam created by developers with the only purpose of making money.

It’s best to invest in new coins which you think will go up because it still has a lot of potential and room for growth, rather than putting all your eggs in one basket and hoping that it will become super successful like Bitcoin.

To summarize,  cryptocurrencies are volatile and should only be invested by those who have the time, patience, money, and resources to manage them properly. We can still make a profit out of these digital currencies but it requires patience, research, and dedication to do so. 

It will take time before you can see significant results from cryptocurrency investments as everyone is trying to make their own by trading or mining them.

Due diligence is important because there are many scams popping up all over the internet that try to trick people into investing just for them to run away with your money! 

Make sure that you always check for reviews, feedbacks and other information about the company or person offering cryptocurrencies before doing anything about it! After all, not everything that glitters is gold.

About Paolo Miguel Besabella 3 Articles
Paolo is a machine learning engineer and technical writer focused on the FinTech space. He earned a professional certificate in "Blockchain for the Enterprise" from INSEAD after studying computer science at Regis University. He has created several whitepapers and pitch decks and has provided consultations for various Web3 projects. Learn more about Paolo via Linkedin