In a market characterized by volatility and uncertainty, investors have a tendency to look for regularities, averages and patterns wherever they can find them. This is entirely understandable, especially when gains and losses in cryptocurrency tend to exceed those seen in more conventional markets. And it’s especially understandable in 2022, when cryptocurrency losses outpaced gains, exposing traders to greater risks than in other years.
One area where (some) investors seek regularity is the timing of cryptocurrency movements.
Yes, there is a wealth of data available on this topic, from month-to-month return percentages for the price of bitcoin, to heat maps on Ethereum gas rates by the hour. This article gathers that data into a global framework, providing some information about the best time, days, and months of the year to buy cryptocurrencies.
The best months of the year to buy cryptocurrencies
Starting with the largest unit of time (in addition to the years themselves, which are not significant), an inspection of the best months of the year to buy cryptocurrencies yields some intriguing results.
As the chart above shows, 2022 was the worst year for BTC’s monthly earnings since 2018, with seven months in the red so far (compared to nine in 2018).
As for the way the months themselves go, the graph can be analyzed in two ways. First, it shows the average returns and total returns (since 2009) for each month, which can be presented as follows:
November – average earnings: 39.21%; Total earnings: 548.87%
April – average earnings: 36.01%; Total earnings: 504.16%
October – average earnings: 26.79%; Total Earnings: 375.04%
May – average earnings: 19.59%; Total earnings: 274.19%
February – average earnings: 13.42%; Total earnings: 187.83%
December – average earnings: 11.46%; Total earnings: 160.37%
March – average earnings: 8.2%; Total earnings: 114.74%
July – average earnings: 8.18%; Total earnings: 114.5%
January – average earnings: 7.59%; Total earnings: 106.25%
June – average gains: 7.46%; Total earnings: 104.4%
August – average earnings: 0.73%; Total earnings: 10.28%
September – average gains: -5.01%; Total earnings: -70.08%
Some things can be deduced from such figures. For starters, if a trader wants to increase the likelihood of making a profit, they may want to focus their purchases on the October/November and April/May periods, which historically have experienced the highest average monthly returns per bitcoin.
Of course, investors need to be aware that they would like to buy cryptocurrencies just before these periods, so as to maximize their potential gains. For example, data shows that September has historically been the worst month on record for bitcoin earnings, so a savvy investor may want to wait until the end of September and then make a purchase, just in time for the potential increases that October and November could bring.
In terms of the optimal time of month for purchases, bitcoin’s price chart reveals that it is often the beginning of the month (i.e. the first ten days or so) that tend to bring the most gains. This is especially true for its action in 2021, which has been a very bullish year for cryptocurrency, bringing more rallies.
Of course, some might say that this data is really only valid for bitcoin and not for other cryptocurrencies. However, most cryptocurrencies are heavily correlated with BTC, so it can still be taken as an indication of what coins like Ethereum and Ripple can do even in any given month of the year.
The best days of the month to buy cryptocurrencies and times of day
Moving on to specific days, there is no such thing as price data that ranks each day based on average returns since bitcoin/cryptocurrency was born. However, there is various evidence and data that offer some valuable insights.
For example, bitcoin volatility data for each day shows that weekends are generally not ideal for traders looking to make a quick profit. Instead, they may prefer to look at Monday or Thursday/Friday, where larger movements tend to be clustered. This works both ways, so it could also increase the risk of a fall, particularly in the bearish years.
The volatility data above is also supported by Ethereum’s average gas prices, which again show less activity on weekends, although in this case things heat up more on Tuesdays and Wednesdays. This implies that, if you’re looking for the day trade or short-term stock, doing it on a Saturday or Sunday isn’t really a good idea.
What the two charts above also show are the times of day with the highest volatility/gas prices, and what’s interesting is that both show more activity over the course of the day. For example, in both cases peak periods tend to be between 15:00 UTC (or 10:00 Eastern Time, 7:00 Pacific) and 21:00 UTC (16:00 Eastern, 13:00 Pacific). So anyone who assumes that the market is more likely to move up rather than down – and who wants to make quick money – is advised to move in time just before this window of opportunity.
Needless to say, “timing” is mostly irrelevant to investors playing a long-term game, at least as far as days and hours are concerned. Instead, many long-term holders may be better off simply by taking an average dollar cost approach, buying some of their desired cryptocurrency each month. Such an approach tends to “mediate volatility” over the long term, although short-term traders who live by volatility may not appreciate it.
Furthermore, it must be mentioned that while the above data covers the history of bitcoin/cryptocurrency to the present day, there is no guarantee that the future will resemble the past. So while weekends aren’t big for volatility, and even though November has historically been the best month for bitcoin returns, this doesn’t have to be the case in the coming years.
Therefore, going long in the fullest sense of the term and using the dollar cost average remains the way forward for most retail investors.