Many people buying bitcoin for the first time want to make sure they receive the maximum possible return on their investment. The legendary stories of people making millions from their bitcoin investments could be some of the first thoughts that might come to mind when you think about buying bitcoin. However, the question “when is the best time to buy bitcoin?” does not have a simple answer as it is difficult – if not impossible – to accurately predict the value of bitcoin at any given time.
The advice you take from this article will depend a lot on why you bought bitcoin in the first place.
Table of Contents:
Before you buy
Before buying bitcoin it is important to make sure you have a solid understanding of how bitcoin works. This will help you make an informed decision about whether buying bitcoin is the right move for you financially. If you’re new to bitcoin, check out our guide to bitcoin to start learning the pros and cons of bitcoin as a cryptocurrency and investment.
It is also important to understand the risks and corresponding security measures you should take to protect your investment. For an introduction to the possible security risks associated with buying bitcoin, we suggest you read “How to spot crypto scams”.
looking to buy bitcoin for the purpose of making money quickly (short-term), you’re probably trying to time the market by trading bitcoin, i.e. buying low and selling high. The value of bitcoin is highly volatile, so you can buy bitcoin at a low price one day and sell it at a higher price the next. However, the probability of getting the timing right is low because it is extremely difficult to predict how the value of bitcoin will fluctuate in the short term.
There are several theories and strategies for timing the market when it comes to bitcoin. For example, even though the cryptocurrency market is open 24/7 (as opposed to traditional stock markets that are only open at certain times), some traders believe that there are certain days of the week, or times of the month, when bitcoin prices tend to be low or high. Bitcoin traders look at historical bitcoin price trends to try to predict future prices. For example, some traders assume that bitcoin prices will rise at times of the month when people are generally paid, because people are more likely to buy bitcoins at those times.
These theories are just that: theories. Trying to time the market is a high-risk, high-reward game, and it should be noted that taking this approach to buying bitcoin can result in large losses. It is safer and more highly recommended to buy and hold bitcoins with the intention of making your investment gain value for the long term.
Most strong believers in bitcoin will tell you that, in the long run, bitcoin is likely to increase in value. Of course, this is not a rule written in stone, but if you look at the historical trend of bitcoin’s value, you’ll see that it has steadily increased over the years since it was originally formed, with some downturns along the way.
With the ”
buy and hold” mentality, it doesn’t matter if you invest during a “high” or “low” in the value of bitcoin, because in the long run you believe that your investment is bound to increase in value. Historically, this has been the safest form of bitcoin investing.
Some strategies that align with the belief that bitcoin will continue to increase in value over the long term include lump sum investments and average dollar costs. Check out our article “What is the best basic strategy for investing in Bitcoin?” to learn more about these methods.
There are no guarantees when making an investment, and it is important to remember that the value of bitcoin remains highly volatile. If you’re trying to time the market in hopes of getting rich quick, you’re increasing the risk that your investment will suddenly lose value. For this reason, we recommend that you consider the purpose behind your investment, including how long you are willing to keep your invested money, before deciding on the best time to make your investment.