Investing in Cryptocurrencies or Virtual Coins: Right Timing is Everything

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AladiEx

6 min readMay 14, 2020

How will I know if it’s the best time to purchase or sell assets in the crypto market? This is a million-dollar question that new crypto traders may be interested to know.

Getting involved in trading conventional assets and goods, it is advised to be keen about the price movements of virtual tokens. Timing can lead to arguments about the most suitable trading strategies that should be employed. Some traders are aware of them while others are at a loss on what the next steps to adopt.

Forecasting price changes

In simple terms, market timing consists of buying and selling virtual coins using a trading strategy that focuses on beating the market by identifying in advance any price changes. The forecasts involve the technical and fundamental analyses to evaluate the economic and industry environment.

For any investor who is skilled in anticipating the price movements, they can easily work to make their assets profitable. Most crypto traders and investors are always on the lookout on the behavior of virtual coins either they increase or decline in value.

Effectiveness of market timing in crypto investment

Crypto investing is quite a new market that shows several nuances. As a result, the industry faces some risks brought by inevitable deflations that may occur when you least expect them. However, it is a good opportunity for potential gains if you know when to buy or sell your existing tokens.

For current and new investors, market timing is a vital factor when deciding to purchase virtual coins. How does this strategy help any investor in the crypto space? Each investment decision is highly dependent on market timing to a certain extent. In the field of cryptocurrency, the market usually never closes. This makes things very essential to fully evaluate the price movements.

As the crypto industry is volatile, any investor should learn how the market behaves and assess your potential risk tolerance prior to making any investment. Identify how secured your assets are, how often the price changes and the ongoing patterns to help you come up with a sound judgment when to buy or sell tokens. The more prepared you are with an in-depth background on how the market operates, the more you can work with a higher risk nest egg that provides bigger returns.

Should I buy or sell now?

To get an honest response, yesterday was the best time to make a crypto investment. However, you can still invest today if you decide to do it. Observe Bitcoin’s price history. If you were one of the early birds who invested in it when it was still new and spent a ‘minimal amount’ of acquiring BTC, you could be a millionaire by this time.

As we deal with the current setting, below are some tips to assist you to decide whether it is the perfect time to purchase or sell your tokens.

Buy low, sell high approach. Also known as ‘buy the dips (BTD),’ this general strategy involves buying more assets as the price declines or once the virtual coin has settled. This technique is suggested during a stagnant or favorable market. The trend increases or works sideways instead of experiencing a declining market. It is where a downward direction is observed.

The rule of thumb regarding the ‘BTD’ is the capacity to check the charts, average movements for both short-term and long-term periods, historical trends, and laddering purchases. Investors can freely buy big or small dips. The big dips are available when the price declines below average. The small dips occur when the price plunges lower from its previous rate. Investors may opt to purchase dips so they can sell right away for a profit or keep them while establishing a long-term plan or employ it to achieve gains in the future. The main strategy is purchasing at a reduced price so there is less room for committing poor judgment in an investment.

When rates are lower compared to overall performance. Buying a dipping asset is a good strategy. However, it is difficult to predict how the price will behave in the next few hours or the succeeding day. An educated guess taken from an analyzed data can only provide limited information. Another means to enter the market is spotting when the rate of your desired virtual coin is lower compared to the average historical forecast.

Some online cryptocurrency sites provide a ‘moving average’ chart that shows the best potential spots to get in and exit the crypto industry. Never make a purchase whenever the price is increasing. Take some time to let it settle down and buy after the sell-off period.

Decide to sell in case of sudden peaks. When you are about to sell your coins, review your finances, rate of risk tolerance, taxation issues, and the reason for investing in crypto.

Yale researchers evaluated the price movements of the main cryptocurrencies. They noted the best time for trading digital tokens that are risk-free is the succeeding week where the price soared at about 20% and you can sell them eventually after a week.

When buying or selling is not recommended. Before deciding to make a crypto purchase, carefully check the price movements prior to buying. This principle holds true to selling. Avoid rushing things or selling right away while exposing your tokens to potential losses.

Do you have a Fear of Missing Out (FOMO)? It is quite difficult to assess Bitcoin, Ripple, or other virtual coins that can potentially peak instantly. When you are a newbie in this field, asking people around who flood trading groups, Reddit, Telegram, and other forums to discuss the increase is more difficult to do.

However, do not let FOMO pressure you when making decisions like purchasing the profitable coins or do panic selling and take part in the discussions. When you are left behind regarding the big events, this might cause new traders and investors to purchase an asset without enough data and miss out an opportunity. Always base your decisions when investing through logical thinking and not merely on your emotions.

Unable to fully understand the technology. Cryptocurrencies are considered innovative as they use advanced technology such as blockchain. When investing in virtual coins, you cannot depend on other people what to do next. It is best to do your homework of conducting tedious research if you have limited knowledge about the innovative technology. Otherwise, impulsive decisions will be riskier and put your efforts into waste.

In-depth understanding of the algorithms, block rewards, pre-mining, blockchain, and all industry’s jargon will enable you to have a more holistic approach in grasping what industry leaders are saying. In time, you will be prepared to actively participate in the trading as an informed investor.

Are you vulnerable to Fear, Uncertainty, and Doubt (FUD)? The main objective of FUD is engaging people to sell and not make a purchase. For example, whenever scammers want to buy a coin at a reduced price, they usually spread negative information regarding hacking, security challenges, and other things to convince other traders and investors to sell as they panic about the situation.

Considering the volatility of the crypto market, FUDsters may manipulate the industry and create a pump and dump scenario, where investors can dump their assets for the potential risk of losing while FUDsters can take advantage of the dumped digital assets at a lower price.

Upon sensing something seems fishy, always use your logic. Identify your main reason when you bought the assets. Know what is going on around you and never act merely on your impulse.

Currently, buying virtual coins like Aladin token is more viable than in the past. When seeking the buy-and-hold strategy, do not worry about market timing. Remember that this strategy is necessary for your long-term goals. If you are looking for short-term profitability, timing is everything. The best time to either buy or sell your tokens is highly dependent on your reason, resources, and current market situation.

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