Best Time To Buy Crypto: Market Timing vs Dollar Cost Averaging

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By Max
Estimated reading: 6mins
best time to buy crypto

Technical analysis, marketing timing, dollar cost average, buy low sell high. 

Everybody has their opinions on the correct way to enter the market. 

But who is actually right?

Read on to find out.

When Should You Buy Crypto?

If you haven’t already, read our 5 keys principles for crypto investing. In addition to these principles, we must understand the role of timing when making investments in crypto. 

Many complex variables make this question difficult. Even if you find the answer, the "best price" can be completely different hours later. A better question would be: what's the worst time to buy crypto?

Now, HODLers will tell you there's no such thing if you don't sell. And it's true if you want to make some returns. But if you want the BEST price to buy crypto, you need to factor in competition. This means, whether you trade or invest long-term, that the popular price is never the best:

  • Buying at the cheapest price without watching the trend
  • Buying because it's moving up
  • Buying because of someone's bullish predictions
  • Buying because the project is undervalued (based on fundamental analysis)
  • Buying because you believe it will go parabolic someday

The best time to buy is at a price that makes selling easy. It's making your entry strategy with the exit strategy in mind. When you buy at the right time, even bad projects can be profitable.

Because in the volatile crypto markets, prices rarely reflect the project fundamentals. This begs the question: is market timing a good idea?

Does Market Timing Work?

When well-executed, market timing can grow your portfolio overnight, even with the worst cryptocurrencies. High-risk goes hand-in-hand with these rewards, which is why this strategy is never recommended. It may work for experienced traders, but does that mean you should do it?

Well, there are different ways to time the market. And with risk-management strategies, even beginners can succeed:

  • Buying large-cap coins to reduce volatility (e.g., Ethereum instead of Polygon)
  • Timing large market trends rather than quick pumps (e.g., Bitcoin's next halving vs Elon Musk tweets)
  • Buying in downtrends with little to no bearish indicators

Market timing allows you to get the best short-term entries and long-term exits. However, what are the chances that you actually catch that price? You can get close to the bottom, but if you try to time it perfectly, you might lose your buying opportunity.

In fact, you could spend less time following charts and make similar profits if you just stay in the market.

Market Timing vs Time in the Market

The opposite of market timing is time in the market. Except for one thing in common: patience. Respectively, before and after buying cryptocurrencies.

When you time the market, you're waiting for the right (not perfect) time to buy. Once bought, you can probably sell anytime and make profits. What about time in the market?

You can buy anytime, and then you wait for the best time to sell.

Before you pick sides, here are some questions worth considering:

  • Would you rather wait to buy or to sell?

Both strategies have targets that, in practice, may never happen. The difference is that the price can only go as low as $0, whereas if you hold, there's no limit to how high it can go. This illusion, however, is the reason holders can't sell (and lose ATH price windows).

Some projects take years ( if ever) to take off.

  • Is cryptocurrency working for you?

When you spend time in the market, money is working for you. When you're waiting to buy, it's not. If it's not, it’s probably losing value.

If you hold, you could make passive income with your crypto. Thus lowering your break-even price. Potentially never having to sell to profit.

  • What's your risk tolerance?

The more you trade, the more you want to reduce risk. Which is why investors prefer to buy and hold. Given that most top coins have positive long-term projections, waiting is enough to profit.

If you bought Bitcoin at the 2017 ATH, you're still on the green.

Market timing is just as risky regardless of the amount. Timing often involves higher trading frequency, which means trading fees. Small traders need more volatility to break even, hence the risk to lose more.

What if there's a way to both time the market while staying in it? Dollar-Cost Averaging (DCA) does just that.

Why Dollar Cost Averaging (DCA) is the Best Investment Strategy

when to buy crypto

Both market timing and holding are overwhelming decisions. Even after you've bought, you're worrying about what Bitcoin is doing. The emotional attachment can make you second guess and make costly mistakes.

DCA is the most objective and balanced investment strategy. You're timing the market by splitting the investment into small, regular purchases (e.g., $1,000 for 10 months rather than one $10,000 purchase). And if you only buy coins with long-term potential, you also profit from spending time in the market.

DCA is buying the same dollar amount and frequency. For example, $1000 for 10 months on a $1 coin (let's say PLS):

  • Month 1 to 5: PLS costs $0.50. Buy 2000 coins per month (10,000 total)
  • Month 6 to 10: PLS costs $1. Buy 1000 per month (5,000 total)

If you get 15,000 PLS for $10,000, your dollar average is $0.75 each. You could sell immediately for a 25% profit. Or you could wait for PLS to surge to $1.50 and double your investment.

Not only do you profit, but you don't miss out on major market movements. And the same can be done when selling.

Best Time To Buy Crypto: The Verdict

The best time to buy crypto is near the bottom before the end of a downtrend, assuming the project has a strong use-case and history length. Since timing an all-time-low is nearly impossible, a way not to miss it is Dollar-Cost Averaging. And if you're worried about buying too high, there's a better way.

DCA doesn't need to be a rigid plan. You can define a range where you feel comfortable buying (e.g., BTC at $18K to $25K) and switch tactics once the price moves away. Or if there are projects like Pulsechain that you'd like to hold, you can buy more during market lows. And then earn staking rewards with the LiquidLoans validator.

The best buying strategies will become more effective when adapted to you.

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Disclaimer:Please note that nothing on this website constitutes financial advice. Whilst every effort has been made to ensure that the information provided on this website is accurate, individuals must not rely on this information to make a financial or investment decision. Before making any decision, we strongly recommend you consult a qualified professional who should take into account your specific investment objectives, financial situation and individual needs.

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Max is a European based crypto specialist, marketer, and all-around writer. He brings an original and practical approach for timeless blockchain knowledge such as: in-depth guides on crypto 101, blockchain analysis, dApp reviews, and DeFi risk management. Max also wrote for news outlets, saas entrepreneurs, crypto exchanges, fintech B2B agencies, Metaverse game studios, trading coaches, and Web3 leaders like Enjin.

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