Crypto Investing
18 Nov 2021

When to Buy and Sell Cryptocurrency? [Updated 2021]

Deepan Datta

Investing in cryptocurrencies can be a fun and rewarding activity. Provided, you invest in the right kind of cryptocurrency that offers huge growth potential at the right price. 

However, the question that troubles most beginners in the investment world is what’s the right price to buy and sell cryptocurrency? When is the right time?  

To help you navigate this highly contentious topic, we have put together this simple guide which includes basic rules of thumb in crypto investing. This will help you minimize your investment risks and improve the chances of profit. 

When to Buy Cryptocurrency?

In theory, it is advised to invest in cryptocurrency when trading at a low price and selling once it reaches its peak. In short, it says to TIME THE MARKET

It sounds simple enough, but it’s far more challenging to execute. Here’s a smarter approach to the question: 

If you’re a long-term investor and are placing your bet strategically and judiciously in the market, then the price level at which you’re buying shouldn’t matter to you. 

For example, the key to successful stock market investing is to invest in fundamentally strong companies and hold them for the long term. Long-term investments tend to outperform the market compared to investors who believe in timing the market. 

The same investment principle applies to cryptocurrency investing.

For instance, if you had invested in Bitcoin in 2017 at a valuation of $18,000, then at that time, it may have appeared like an expensive investment. But, four years down the line, it doesn’t seem that way anymore, and the returns generated by Bitcoin have already outperformed the returns generated by traditional asset classes. 

when to buy and sell cryptocurrency

When is the best time to invest in cryptocurrency?

You have noticed how difficult it is to time the market and consistently deliver higher returns because of the volatile market condition.

Therefore, the best strategy to follow is investing in the cryptocurrency IMMEDIATELY that you believe has a long-term view of high growth potential.

Another approach you can follow is to split your investment into phases rather than investing all at once. This investing method is known as Rupee Cost Averaging, popularly known as Systematic Investment Plan (SIP) in India.

Can I use technical analysis to determine the buying price of the cryptocurrency?

Yes, you can use technical analysis to determine your buying price of the crypto asset. You can use the buy limit order feature, where the trade order is executed at the limit price set by you or lower. 

For instance, if the market sentiment is negative, you can wait for the market to correct itself a bit and then make your investment accordingly. A lower acquisition cost will help you drive the profit percentage of your investment in the long run.

Why is timing the market a bad idea in investing?

Timing is akin to gambling in investing and has many potential pitfalls, making it a bad idea for investors to use it in their investment strategy. 

The cryptocurrency market is highly volatile, making it difficult for you to maintain consistency. For instance, the risks of false-positive and false-negative in price trend confirmation are higher and being unable to identify one can wreak havoc to your investment portfolio.  

Also, there exists a higher chance of mixing emotional reactions with investment decisions. And, beginners and retail investors are more prone to be affected by sentiments of greed and panic in the market. 

When to Sell Cryptocurrency?

In the world of investing, selling is considered more difficult for investors as compared to buying. Conceptually, it should not be like that, but the emotional factor and lack of investment discipline tend to impact the decision-making process of investors. 

You should be aware that, in investing, selling has two purposes- either you sell your investment with profits, or you sell to redistribute your investment portfolio. And, knowing when is the right time to sell your investment is very important.

The following are the conditions under which you can consider selling your cryptocurrencies:

  • When all your investment objectives are met
  • When the price of your cryptocurrency has gone up too high in a very short period, and the market is in a highly volatile status. The current valuations are uncomfortable to you.
  • If your investment in the particular cryptocurrency has moved against your prediction and you are standing at a loss
  • When you need money, you can exit the investment

4 Things Not to Do When You Buy and Sell Cryptocurrency

Investing in cryptocurrency is easy and rewarding, but only when it is done right. The following are four things you should avoid while investing in cryptocurrency:

  • Don’t let FOMO and FUD sentiment drive your investing decisions like when to buy cryptocurrency and when to sell.
  • Don’t buy on speculation. Cryptocurrencies are highly volatile, and the uncertain regulatory environment makes it difficult to predict future price movements.
  • Don’t invest in cryptocurrencies without having an exit plan in place. Exit strategy helps to limit your losses in the event of uncertain market conditions and accomplish your primary investment objectives. 
  • Don’t forget your risk tolerance level. You should only invest the amount of money in the cryptocurrencies you can afford to lose.

To Sum Up…

Questions like when to buy and sell cryptocurrency or when is the best time to buy cryptocurrency trouble a lot of investors. Such questions are a major roadblock to start investing in cryptocurrencies. 

RESEARCH is your best hope for answering these crucial questions. Educate yourself and stay up-to-date on the latest developments in the crypto market.

In investing, there is no alternative to good research. It gives you the conviction and confidence to decide on when to sell and buy cryptocurrency

Happy Investing Folks…

Common FAQs 

When should I sell my cryptocurrency?

Selling decisions are very subjective; however, you can consider selling your cryptocurrency in the following circumstances:

  • You have met all your investment objectives
  • The price of the cryptocurrency has risen too sharply and quickly and is trading at unsustainable levels
  • Your investment decision has gone wrong, and you are at a loss
  • When you require money

How do I know when to buy or sell my bitcoin?

There is no perfect time to buy Bitcoin as it is a growing asset class and has a lot of growth potential. For beginners, buying on dips is the right strategy to go forward. 

For selling your Bitcoin, you can refer to the article above. 

What time of the day is the best to sell cryptocurrency?

The cryptocurrency market is operational 24/7, which makes it unique compared to other forms of market. You can buy or sell your cryptocurrency at any time of the day, depending on your requirements. 

Is buying and selling cryptocurrency day trading?

No, buying and selling of cryptocurrency cannot be referred to as day trading. Day trading is a form of speculation in cryptocurrencies to profit from the price changes within a day. 

The trade must be completed, both buying and selling or vice versa, and cannot be carried forward to the next trading day.

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Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.

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Deepan Datta

Content Writer

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