When Is The Right Time To Invest And Sell Bitcoin?

Last Updated January 11th 2022
5 Min Read

Bitcoin is a game-changer in the cryptocurrency market. The coin spearheaded the race towards blockchain technology, which has now become popular among developers. The launch of Bitcoin also led to the creation of the cryptocurrency market that now has a valuation of around $2 trillion. Despite these signs of growth, Bitcoin and the broader crypto market has not been spared from its challenges. 

One of the major challenges that Bitcoin faces is high volatility. The prices of cryptocurrencies can change without notice, which can lead to massive gains or massive losses. As such, it becomes hard for investors to predict with certainty when is the right time to buy or the right time to sell. 

However, with the buzz surrounding the coin, it has made it hard for investors with a risk appetite to stay away from the market and their resilience has usually paid off because prices keep increasing. Bitcoin recorded an all-time high of $68,789 on 10th November when the crypto market was at its peak. This meant that the coin’s value had doubled in less than six months and BTC enthusiasts reaped big. 

While this volatility can be risky and it usually deters traditional investors from getting involved in the market, it is exhilarating for investors who look for price action. In May 2021, the prices of BTC crashed to below $30K, in a move that saw investors make massive losses. However, this did not prevent people from joining the market later on, and BTC has made an impressive recovery to start trading at above $60K again. 

These fluctuating prices make it very hard for investors to know when to invest and when to sell their holdings. In May, when the market was at its peak, it attracted some investors to the market. However, the loss that happened shortly after led to these investors making massive losses. 

Nevertheless, the crash witnessed in May was not a loss for all investors, as there are those who ventured in 2020 when the prices were around $25K. This meant that even with the May crash, these investors were still in a profitable zone. If these investors have continued to HODL, their investments have now doubled again because of the recent market rebound. Some market analysts have speculated that the crypto market will make another rebound soon, after the December crash, as we could see BTC making new all-time highs

When addressing the concerns of market volatility, some market experts have argued that price dips are usually short-lived, but positive [rice actions in these sectors have always triggered a bullish sentiment that causes massive gains. Hence, BTC’s bull run is always round the corner, and it only depends on whether buyers are willing to jump in and buy when the market signals are in favour of a bull run. 

However, despite these gains, investors need to know that there is no shortcut to getting rich. You cannot invest in Bitcoin and then become wealthy a few weeks after. Most of the people who have gotten rich out of Bitcoin are those who invested a few years ago when BTC was just new in the market. In 2009, BTC went for around 10 cents, and with $100, one could buy around 1000 BTC. If such a person held these coins over the years, their current investment is worth over $50 million, making it a lucrative venture. Hence, if you want t to become rich out of investing from Bitcoin, you need to be patient and possess the ability to recognize market trends to jump in at exactly the right time.

Check out: Factors That Could Significantly Influence Bitcoin's Price

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Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

When To Invest

One of the ways for you to know whether it is the right time for you to invest in Bitcoin is by analysing the historical performance of the coin. Evaluate how Bitcoin (BTC) has been trending over the past few months, to recognize whether a correction is around the corner or whether the prices will make any significant surges.

However, the price-performance alone cannot be used to analyse whether Bitcoin is a good investment. Other factors should also be used such as looking at technical and market indicators that will show where the price is headed. Firstly, coins that make massive gains in a short period of time tend to attract more buyers, and the coin could easily reach an overbought level. If this happens, the coin can make a major correction that could result in a price dip. 

On the other hand, a coin could also make a major dip that could deter investors from buying. However, if the selling pressure reaches exhaustion, buyers tend to turn up and buy the coin, which in turn causes massive price gains. In March 2020, the price of BTC was around $4000, but this rapidly grew by over 800% to reach $33,000 in January 2021. However, the prices fell five months after and led to price gains and losses. 

If you are not a seasoned trader who does not know how to use market signals the right way, you can make an investment decision when the Bitcoin price is low. For example, those who chose to take a risk and invest when prices hit rock bottom in May have made huge returns. During the May market dip, prices dropped to below $30K, in November they increased to $68K, meaning that investors who jumped in when these prices were low have almost doubled in value. 

However, one should be cautious when investing in Bitcoin during the dip, because prices could crash further. If traders fail to jump in when prices are low, it could lead to further losses that could be bad for new buyers. This makes it impossible to tell when the right time is to invest in Bitcoin. However, those who go with long-term gains have a better chance of making gains. 

Another trading strategy is for you to invest in multiple phases. You can buy Bitcoin when prices are low and sell shortly after, before making another investment again and waiting for more gains. 

Don't Miss: Pros and Cons of Investing in Bitcoin

When To Sell 

If you want to sell Bitcoin, the best strategy is for you to do so when prices are high. However, with crypto market volatility, it can be hard for you to know when a high has been achieved. In this case, you need to set a realistic target of the gains you want to achieve and then sell when the prices hit that price. However, you can choose other investment options that would be ideal for you, especially if you do not have the required risk appetite. 

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Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

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