When is the best time to buy cryptocurrency? 2 Tips to Get Closer to “Perfect Timing”!

The global and unforgiving nature of cryptocurrency trading presents traders with a number of challenges, including finding the best time to trade.

Those wishing to execute large buy and sell orders must: identify times when there is maximum liquidity (availability of counterparties at any given time for you to exit or enter a trade) and trading volume (how many times a coin changes hands at any given time). It’s as if a grocer with large quantities of produce wants to ideally set up its stall in the busiest market with the most visitors.

For novice traders or those looking to place smaller trades, liquidity is less of an issue. However, they may still want to trade on more established platforms as the prices on these apps are usually less affected by large orders or manipulation.

Finding the right times to trade is challenging not only for spot traders (people who buy and sell with immediate delivery of assets), but also for investors in decentralized financial (DeFi) tokens.

Blockchain transaction costs, such as Ethereum gas costs, may change considerable hour by hour, which is why it is especially important for beginners with small wallets to pay attention to these prices, as gas rates are more sensitive to network congestion than to the size of a market.

For example, someone who wants to trade $100 worth of cryptocurrency may end up paying double that amount in gas fees if they intend to trade at a busy time.

CoinDesk has asked companies, market analysts and professional traders to help unravel the mysteries surrounding crypto trading and why time matters.

Crypto trading had fairly simple patterns before mainstream adoption only started in earnest in mid-2020. Western institutions avoided cryptocurrency at all costs, and trading, along with other crypto activities such as mining, was concentrated in Asia.

Until 2021, the Asian impact was so great that bitcoin bulls feared the Chinese New Year in February when miners dumped bitcoin en masse and drove prices down.

But these models have changed.

“During the 2017 rally, sunrise in Japan was a major problem for bitcoin prices,” said Mati Greenspan, founder and CEO of investment advisory group Quantum Economics. “Now that Wall Street is more closely involved, much of the action has moved west.

“Today, the first Asian session is so thin that we suspect some traders could use it to manipulate the price,” he added.

There are lots of data suggesting crypto trading activity coincides with traditional market hours in the United States, illustrating that crypto investment has largely shifted from east to west.

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“The volume of bitcoin spots tends to peak during the hours of the US stock market, especially at the opening bell,” said William Johnsonan analyst at crypto analytics firm Coin Metrics.

According to a Coin Metrics chart shared with CoinDesk, the correlation with trading hours in the US was most pronounced in the first quarter of 2022, indicating a clear evolving trend.

Bitcoin spot volume over three years

“Never rely on weekends”

Crypto is not resting on the weekend, but US stock traders are sleeping. So what about the weekend trading activity?

“Put simply, weekends have a decline in smarter money participation,” said Cantering Clark, a pseudonymous crypto trader and market analyst, referring to capital controlled by institutions and professional traders. He explained that there is a lot of activity on the weekends by algorithmic trading robots and market makers (or liquidity providers). “The market is less attractive to trade,” he said.

According to a Genesis Volatility “actual volatility” chart, there is less volatility on the weekends. In general, traders look for volatility as it provides opportunities for lucrative trading.

Realized Volatility (Genesis Volatility)

“Weekends in traditional markets like forex have always been known as thinner. Knowing this, the banks would push the market to force the moves. The same can be seen in cryptocurrency, so for a long time the idea was that the whole weekend activity was ‘bad’ and was worth dying for,” Clark said.

If bitcoin rises over the weekend, traders often expect the market to fall over the course of the week, explained clark† “Never rely on the weekend” is a good thing to keep in mind. †

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