Gone are the days when there used to be only one crypto in the market, and thousands of others have joined the space, each bringing their unique purpose and promise to the people.
Now, while the opportunities are endless, this begs the question: When should one time the crypto market gain optimum results?
This guide will help you do just that so you can maximize your profits relatively securely and safely.
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When to Invest in Crypto: Timing Strategies for Coinbase Users
Finding the right time to invest in cryptocurrencies is extremely difficult due to their volatility, and you can never be so sure when or where the market will move. And the worst part is, even if you anticipate your next move, things can go sideways in just a matter of minutes.
However, this does not mean one should stay away from investing in cryptocurrencies; rather, one should develop an in-depth understanding of the market and then use different investment strategies so that optimum results can be achieved
Market Factors influencing the best time to invest
Market factors are umbrella terms that consist of a wide range of factors that drive the crypto market’s volatility. These include:
- Economic Conditions: Multiple economic conditions, such as inflation, interest rates, and unemployment, affect the price of the crypto market. For instance, if inflation is high, more investors will likely invest in cryptocurrencies as they need a way to hedge against inflation.
- Government regulations: Another market factor that influences the price of cryptocurrencies is government regulations. For instance, if strict regulations are imposed on cryptocurrencies, it will discourage people from investing in them and, therefore will cause the market to decline.
- Interest Rate: Federal Bank interest rates play an important role in bringing investors to cryptocurrencies because a higher interest rate is inversely proportional to the appetite for high-risk assets such as crypto.
- Hype and Fear: Lastly, hype and fear play an important role in the price movement of cryptocurrencies because a blooming crypto market creates a positive sentiment, thus bringing in investors. Whereas in the case of a bleeding crypto market, it triggers a fear, and thus a mass sell-off occurs, triggering a higher price fall.
Seasonal Trends in the Crypto Market
In the crypto world, seasonal trends refer to the widespread belief that the price of Bitcoin will rise and decrease throughout a predetermined period, ultimately impacting its price. This is because Bitcoin was the first crypto to be ever created. Therefore, there will always be a significant value attached to it.
One of the most anticipated events is the halving of Bitcoin supply because this is when the price reaches a high once every four years before it plummets sharply. Bitcoin halving is pre-programmed into its blockchain, and after every four years, the rewards for mining Bitcoin are halved.
Long-term vs. Short-term investment strategies
Depending on your investment goals, one should carefully choose long-term vs short-term because each has its benefits and shortcomings. These include:
- Level of Stress: Long-term investors experience less stress as compared to short-term investors, as they can ride out market volatility because they are not affected by daily market fluctuations.
- Regulatory Changes: As governments and regulators continue to roll out new laws to adapt their approach to cryptocurrencies, certain crackdowns can hugely impact long-term investors because short-term investors can easily escape the crackdowns or regulatory changes.
- Benefits from technological advancements: Long-term investors benefit from technological advancements such as upgrades, scalability improvements, and other new use cases. Whereas short-term investors leave the crypto project way before any changes come.
Dollar-cost averaging and Recurring buys on Coinbase
DCA or Dollar-cost averaging is an investment technique that aims to reduce the impact of market volatility by investing a set amount regularly. For example, you can purchase Bitcoin for $100 on the 1st of every month.
With the help of DCA, $100 will be purchased more Bitcoin if the market price is low, thus increasing the potential for greater gains. However, when the market is up, $100 will be purchased less Bitcoin, which will reduce the risk of loss if the market turns the other way.
Ultimately, DCA allows investors to invest their capital one by one rather than going all in at a particular time, which is extremely risky.
On Coinbase, users can take advantage of DCA by making automatic recurring purchases. All you have to do is go to Buy, choose the asset you want to buy, specify the amount, and then choose a daily, weekly, or monthly schedule.
Coinbase will automatically repeat that purchase until you change it or cancel it.
🎁 Bonus time: Invite your friends to Coinbase to get rewarded
Coinbase has an excellent program that allows you and your friends to earn reduced trading fees by making people sign up and then make their first crypto purchase using your personal referral link.
- Sign in to your Coinbase account and visit referral pages on the Desktop or go to Settings in the Coinbase mobile app.
- Copy and share your unique referral link with your friends.
- Once your friend uses that link to create an account and makes their first purchase on Coinbase, you and your friend will be automatically eligible for the discount.