While this article does not aim to provide investment advice, it will attempt to outline some methods to use when deciding on when to enter or exit the crypto market.
Getting Started: The Basics
As a first step, you will, of course, need to select an appropriate exchange for your needs and ensure that you are dealing with a legal company that is allowed to operate in your country.
Also be sure that you have a secure wallet for storing your currency, as this can mean the difference between keeping or losing your coins in the event of a hack.
Outlining an investing strategy to Buy
Once you’ve chosen a safe exchange and a secure wallet, the next step in the process will be to decide how you will be investing. Ultimately, different strategies appeal to different investment styles and there is no one way of going about it.
Regardless of your personal investment philosophy, there are two major strategies from which all others stem. On top of selling and hodling however, there is also the understanding of when the best time to buy a given currency is, and how to ensure that picking the correct time to purchase said currency can give you great returns and ensure that you’re profiting.
Buying Bitcoin is an art form much like investing as the value of the coin regularly fluctuates throughout the day.Picking the right time to buy said currency is key. In the longer term, the current value of Bitcoin is lower than it has been for the last several months, so purchasing the currency right now could be an appealing option. All this can only happen when one puts a great amount of effort in learning the market cycles. Entry price defines the worth of an entire portfolio.
What are market cycles?
In general, we are speaking about the time period between two highs or lows of a market. In the conservative stock market, such market cycles happen over longer terms (years) on average.
What differs between the conservative stock markets and the crypto ones, is the crypto volatility. While a sharp daily movement of NASDAQ is considered to be 1-2%, Bitcoin, which is considered the most stable Cryptocurrency and the base asset, can drop more than 10% daily (and rise 17%, and vice versa). And this is considered usual behaviour.
The above chart describes the psychology of a market cycle, the most common emotions people experience as the market fluctuates. These human emotions drive our financial markets much more than the market fundamentals.
Where are we at in the current market cycle?
First, no one knows, and we can only estimate. At the moment, it seems like we are between the stage of depression and disbelief. As mentioned before, we have had a large correction from the $20K area to $3,200 (as of this writing). We expect the price to remain stable or slightly negative for a while. Is this positive overall? Yes, definitely. This is natural and needs to happen. The feeling of euphoria has bloated the blockchain space. The depression will kill a lot of unnecessary projects, the dumb money, and will create some room for the stronger real projects that are here to stay, and to new, better projects and new smart invested money.
In Conclusion: Key steps to understanding market cycles
- Market cycles are a natural thing, accept it.
- Cut out emotions as they can become your worst enemy.
- Look for both positive and negative catalysts that can trigger a new phase.
- It’s hard to pinpoint exact beginning and end points.
- Market cycles help analysts make better decisions.
- Buy low, sell high. As simple as that.
Buy when there is blood on the streets, even if it is your own blood- Baron Rothschild
HODL- Easiest Crypto trading strategy
The next strategy in terms of investment is HODLing on to coins. In effect, you make an investment into a given cryptocurrency and then sit on it while you wait for its value to rise and then sell on the currency for a profit in the future.
This method is relatively simple and is a passive approach to investing as they only work required of you is to choose the right time to purchase the currency and look at the point where it has peaked. This is a longer-term option and given that Bitcoin is projected to rise and rise in value on a regular basis in the future. This may be something worth exploring for a longer-term investment opportunity rather than short-term for the ones who have intermediate knowledge about the market.
Ultimately, using a combination of the methods and having various amounts of the coins is something that numerous individuals looking to profit would undertake. Whilst, no method is foolproof and there is no right way to invest, by researching and diversifying is an option that would provide you with a strong chance of making sizable returns.