How to choose a good time to buy bitcoin. 6 tips

How to choose a good time to buy bitcoin. 6 tips


Understanding when it is possible to buy cryptocurrency profitably is the most important thing in trading and investing. Experts told what strategies work best

In investing and trading it is very important to find the right moment to open a trade. Even expecting a multiple increase in the price of bitcoin to $500,000, as predicted by the first crypto-billionaires Winklevoss Brothers, there is a big difference at what price to buy: at $3200 or $20,000.

There are many ways to find the right time to buy. For example, by using a technical analysis of an asset graph or other indicators. One of the most common options is to open a trade from support levels.

Often the price of an asset "bounces" after falling to a certain level. If this is repeated several times, you can assume that this level of support has formed. This makes it likely that the rate will start to rise after a re-decline to support.

In such situations, traders place orders to buy cryptocurrency at the support level, thereby strengthening it. Under this mark is placed stop-loss - a special application that allows you to sell the asset if the price breaks the support and continues to decline.

This strategy worked successfully in 2018. Then the BTC rate, starting with a decline from $20,000, for several months fell to the level of $6000 and bounced off it. But in November the support did not survive, and the price went to $3200.

Vladislav Antonov, an analyst at Alpari, said that when trading from a level it is important to make sure that it matters. The criterion may be, for example, a few touches of the price and a rebound from this mark. Or, if a large amount of asset purchase has formed at this mark, it can be determined by cluster analysis.

Another way to find the right moment to buy is to trade on a trend. Investors in such cases do not make deals until they are convinced that the price has moved to long-term growth. If this happens, then the asset is bought after short-term falls.

For example, in March the BTC rate collapsed to $3800, but then began to gradually recover. Growth was accompanied by short-term falls. Each time the new price minimum on the chart was higher than the previous one. This situation means that an uptrend has formed and, until it breaks down, it is possible to buy an asset on the declines.

The trend strategy works better with cryptocurrency than in other markets, said financial expert CEX. IO Broker Alexander Yanyuk. Shapes such as a wedge, a double top/double bottom and a flag can also be used to find the right moment to buy. But it is better to look for these formations in the medium term - from day to month. At the same time, other indicators of technical analysis, such as RSI, stohast, MACD, may contradict each other because of the high volatility of the price of digital assets.

In addition to technology, there are also psychological indicators, Yanyuk added. One of the old principles of trading: to buy on expectations, to sell on the news. An example here is the May halving of bitcoin, when before the event the price rose sharply, and after - briefly decreased. The same situation is now unfolding on Ethereum. The price of altcoin increases on the expectations of an update to the second version of the network, but when it happens, may fall.

"Right now we are seeing growth on Ethereum, which so far looks rather restrained, as investors can not estimate the probability of introducing a new algorithm Proof-of-Stake this year. However, rumors that the algorithm will be introduced before the end of the year and possibly as early as November, fuel the hype. Any negative news is jeopardized by ETH quotes. Once the PoS algorithm is injected, Ethereum quotes are likely to come under intense pressure," Yanyuk warned.

To find a moment to buy Antonov also offered to track the big deals of players on special platforms. If you know how to read the stock glass and the history of trades, you can see how a major player crushes his application for small volumes, so as not to disclose their plans. The program finds such deals and glues them together, which helps to analyze the situation.

Traders often use the RSI indicator, the relative strength index. It can determine the state of the asset - oversold or overbought. If the value of RSI falls below 30 percent, it allows us to assume that the cryptocurrency is oversold and those who got rid of it may soon start buying coins back.

But it is risky to make deals based only on RSI. This indicator can give conflicting signals at different lengths of time. For example, on an hourly chart, RSI may show that the asset is oversold, but there will be no such signal on the day. Antonov believes that the concept of oversold/overbought is "only in books" and it is necessary to take into account many nuances.

"Such oscillators are used for trading in a sideways trend and on a trend, although in the latter case the indicator can give a false signal. It is enough to change the period of the indicator and there will be no overbought or oversold. Tip one: disassemble the formula for calculating the indicator and understand what it shows and on what parameters the value depends. The RSI most often uses divergences," the expert explained.

Viktor Pershikov, a leading analyst at 8848 Invest, believes that the technical aspects of buying or selling a digital asset are a subjective tool that cannot be extended to the same extent to each market situation. Certain levels of support or resistance, indicator readings, and dominant trends will differ from analyst to analyst or from situation to situation. In other words, there are no uniform rules of technical analysis that allow you to always make a profit, especially those traders who do not have enough experience in the use of such tools.

Instead of technical analysis, Pershikov suggested to focus on fundamental analysis, i.e. to study the features of each blockchain project. For example, to analyze whether there is a demand for the technology that the company offers. A good example can be a Chainlink token. The startup developed oracles - these are special algorithms that are necessary to track prices in the decentralized finance sector. In 2020, DeFi showed a major growth, which similarly affected the Link token. Since the beginning of the year, its price has increased by almost 400%, to the current mark of $8.6, in August rising to $19.5.

"In determining the right investment point, the trader should pay attention to such indicators as asset capitalization, the state of the sector, the demand for technology from the community, the stages of development of the Road Map project, as well as, as far as possible, analyzing the economic model of the project, from the presale stage to the moment of withdrawal of the asset on the exchanges," Pershikov said.

On September 21, The head of the Investment Fund Galaxy Digital Mike Novogratz called to buy bitcoin. The investor is sure that it makes sense to invest in cryptocurrency at current prices, it is an opportunity to buy digital assets while they are in the early stages of distribution.

Comments

Popular posts from this blog

Bitcoin will not be able to repeat the 2017 rally. Analysts are sure of that.

"Investors need a minimum." When Bitcoin Will Begin Recovery