With prices going up and down by as much as 20% per cycle and dipping or rising till a fortune is either made or broken, determining the buying and selling time of Bitcoin is a real perplexing maze. This complexity is all the more accurate when it comes to inexperienced or rookie investors who have just started surfing online crypto exchanges and making sense of the Bitcoin price chart, having their heads wrapped in all sorts of trading techniques, investment hypotheses, and other concepts surrounding the crypto space.
Lately, Bitcoin prices have been rallying, like many pundits and analysts had previously predicted, managing to establish a new ATH worth over $99K. As billions of dollars got withdrawn from different funds to be poured into Bitcoin before the election and into the latest launches known as Bitcoin Exchange-Traded Funds (ETFs), and other capital got directly injected into the new investment vehicle market, the groundbreaking blockchain-based currency entered a new and different bull run. Add all the hype materializing in invested capital that stemmed from the general belief that some pro-crypto regulatory changes are on the way, and you can easily grasp why experts envision the asset at over a record $100K soon.
All the buzz in the crypto community and beyond, reaching the most unseasoned investors, begs the question of how one can tell when the time to purchase and cash out on Bitcoin is right. This is what we aim to tackle and help decipher for you, so keep reading to make the most insightful decisions!
First, let’s shed light on the concept of a bull market
Before we break down the steps to spotting the right time to sell and buy Bitcoin, one must clearly understand what the bull market that makes all the discussions is really about to clarify any misconceptions. According to the larger analyst category, a bull market represents a period of 20% growth in stock prices after witnessing a recent low point, which is usually charted by monitoring the performances of primary indexes such as the S&P 500. All of this helps us now understand where Bitcoin is, as the S&P 500 rose by around 24% from the previously experienced low in October of last year, only that there’s a trick. And this year, the heavyweight has doubled, up 40% since the ballots got cast. On a YTD basis, Bitcoin gained over 140%.
In Bitcoin’s context, the situation is a little bit more challenging because the asset is inherently witnessing extreme surges and dips owing to its highly volatile nature and the lower stability in the market. Bitcoin has made history as a widespread investment asset wearing legitimacy coats that experience casual 20% price fluctuations. As we have seen, the last year has only seen three such inflations and four such dips.
This chaotic behavior can make it challenging for investors to make long-term predictions and directional plays. As such, a few other variables, like the derivatives market, the market sentiment, and trading volume, are looked into before pronouncing a bull or bear cycle in the crypto realm.
Taking the S&P 500 as a benchmark for comparison
Bitcoin has succeeded in outpacing the S&P 500 growth percentage this year. For they’re often used to draw parallels and understand more easily what cycle Bitcoin traverses, experts such as the research lead at crypto data and index provider CCData analyzed the 30 Day Rolling Volatility of the two spanning the last 14 years. The leading cryptocurrency was approximately 3.3 times more volatile compared to the stock market index over the timeframe spanning 2022 and 2024’s commencement.
This is an example of where you should start your assessments to learn where Bitcoin finds itself at a particular moment. Finding out a price movement threshold, such as a hypothetical $100K, is the first step in recognizing what the current market trend is. Then, the 20% benchmark generally used by the traditional industry to determine a rough price is increased, following a comparison between the primary crypto and another asset.
Learn to analyze the chart
Assessing Bitcoin’s price chart is essential when you’re tempted to sell, for experts advise taking this action when the chart is conveniently suspended over the 50-day to 200-day moving averages. Such a position indicates a bullish market tendency that, despite common sense, makes rookie investors take the wrong action, buying high and selling low.
Buying when the market is ascending could yield some profits, but purchasing when it has low potential is even more rewarding. With Bitcoin’s most recent price record broken, it’s safe to say that deeming whether to buy now is a matter of thorough calculation of a mix of risk and reward possibilities, among other things.
Make sense of moving averages
Moving averages represent data smoothing indicators that help build one flowing line. Furthermore, if BTC’s price trades above the 100-day moving average, the performance is a sign of a medium bullish trend.
The moving averages ranging from 50 to 200 days are essential benchmarks. Parting ways with your Bitcoin when the chart is positioned above them presupposes a market that has been on an ascendant path lately, indicating a good moment to do away with the coins before the opposite trend shows up.
Resist the temptation to time the market for bottoms or tops
You may find yourself lured into timing the highest points of the boom and the lowest points in a recession, or the trends also known as peaks and throughs. This strategy, however, will make you feel like you are trying to find the way home from a foreign country without GPS or a map.
The best compass is sticking to a well-defined strategy built on the principle of not falling prey to emotional trading. Many investors find themselves misled by emotional factors such as FOMO or FUD, neglecting their initial promise to stay true to HODLing and irrationally selling or trading their Bitcoin.
Don’t forget: in the highly volatile world of crypto, the best anchor to use is a concise and solid strategy.
