Cryptocurrency values have plummeted over the last two weeks, only to recover in recent days. While falling prices may worry investors, they may also provide excellent buying opportunities. This is especially true for higher-priced assets, which may become more affordable if purchased during a downturn. When the market is in free fall, it may appear that now is the best time to buy cryptocurrencies.
Should you, however, invest right now? Here’s everything you need to know about it.
When is the best time to purchase cryptocurrency?
In theory, it makes sense to buy investments when they are cheap and sell them when they reach their peak. This is, however, far more complicated than it appears. It is extremely difficult to time the market, and it is even more difficult with cryptocurrencies because these assets are far more volatile than the average stock.
Cryptocurrency values have been on a wild rollercoaster, making it nearly impossible to determine the best time to buy. If you buy now because prices appear to have reached a bottom, there’s a chance they’ll fall even further, and you’ll have bought too soon. However, if you wait too long, prices may skyrocket, and you will have passed up your opportunity. This is why traders use software tools such as the divergence indicator to make sound trading decisions. Because cryptocurrency, like equities, has no track record, it is anyone’s guess whether or not these currencies will recover from their slumps.
So far, major cryptocurrencies such as Bitcoin have recovered from downturns. However, there are no guarantees that these investments will continue to prosper, and cryptocurrencies as a whole may collapse. If you buy at a low price expecting it to rise, you may be setting yourself up for disappointment if bitcoin fails.
When is the best time for you?
When, if ever, should you buy cryptocurrency if you’re interested? The truth is that it doesn’t matter as long as you approach it strategically. The key to making money in the stock market is to buy good investments and hold them for the long term. If they are truly sound investments, their value should rise over time, and their prices should rise in tandem.
The same logic applies to bitcoin. If you believe cryptocurrencies have a bright future and will transform the world, it makes no difference whether you buy when Bitcoin is $60,000 or $30,000 per token. Even if it ever reaches, say, $500,000 per token, you’ll make a tidy profit. Of course, no one can guarantee the success of Bitcoin or any other cryptocurrency. If you are going to invest, you should do so because you believe in its future and are willing to keep your money for years, if not decades. If you’re just looking to make a quick buck, you’re playing a dangerous game in which you’ll most likely lose more money than you make.
Another option is to use dollar-cost averaging to reduce price volatility. When you invest a set amount of money on a regular basis, such as $1,000 every quarter or $300 every month, you are averaging your costs.
You may be tempted to buy when prices are high. You will, however, invest when prices are lower. Those highs and lows will eventually level off. This can help to mitigate the impact of market volatility on your assets, and you won’t have to worry about purchasing at the right time. Keep a long-term perspective in mind when investing, regardless of when you decide to do so. Nobody knows whether cryptocurrencies will succeed or fail, but if they do, you may be able to increase your profits by investing for the long term.