The BEST Time To BUY Crypto! Part II
Crypto today is an industry beyond what the early Bitcoin adopters in 2010 could even imagine.
We find cryptocurrencies oriented in payments or privacy (Bitcoin Cash, Monero, ZCash), but the innovation didn't end there. Ethereum smart contracts produced a massive impact of flourishing innovation with DeFi, NFTs, Web3 wallets, and Dapps.
Six months have passed since I published "The BEST Time To BUY Crypto! (Part I)", and perhaps today is the best time to revisit it since we are entering a stage that seems to be a perfect opportunity to invest.
There are plenty of warning signs when it is best to start selling crypto, yet we tend to ignore them.
Newcomers will most probably invest when crypto is trending, with mainstream financial news hyping it up and allocating an abundance of time, especially for the crypto "blue chips" as they lately labeled some of the top cryptocurrencies in market cap (BTC & ETH).
This hype only lasts a few months since the volatile nature of the crypto market is still under the influence of the speculation surrounding the boom and bust cycles of BTC.
Signs of an Over-heated Market
At this stage, the crypto market is not overheating.
It is basically in a downturn for months, and interest seems to be at its lowest point since two years ago.
We examine first some of the top indicators of a market we should avoid, as the best time to begin buying is when interest is low, and crypto is not on the mainstream news.
Celebrities Endorsing Crypto (And The Special Case of Elon Musk)
Celebrities are now into Crypto!
It is going to be a huge opportunity you can't skip again!
Musk himself is tweeting about this cute little Doge, and all the memes he posts are so popular!
This is never a good time to buy.
Random celebrities that suddenly endorse cryptocurrencies are always a signal of an overheated market and indicate a sell-off is imminent. To put it simply, if an investor buys following the financial advice of a celebrity, then most probably will have to sell at a vast loss.
It all depends, though, and the some celebrities may become significant in the long run.
In case a scientist or well-respected professional endorses (for any reason) a cryptocurrency, then it is different and perhaps it represents pure interest and enthusiasm in this financial technology.
The typical celebrity doesn't focus on educating its audience or having any sense of responsibility towards directing them with proper financial advice.
The rule, is that celebrities endorsing cryptocurrencies are not going to be credible sources for investing advice and should be avoided.
Musk is not a regular celebrity (like singers, rappers, actors, athletes) promoting paid content for a random crypto project and presenting it as an investment opportunity to his followers. Musk is one of the most successful businessmen, so the gravity of his words differs from other popular individuals.
Still, Elon Musk, initiated a vast "pump and dump" for Dogecoin since he selected this digital currency as a medium of exchange without really examining if Dogecan works for payments.
Doge price is down by 80% since its ATH.
Volumes in this chart are not representative, as most Dogecoin volumes were produced in trading apps like Robinhood and not the crypto exchanges. (I don't know if there are charts available representing the total volumes of Doge from all trading apps and exchanges).
Dogecoin was an abandoned (by its founder) cryptocurrency, released about a decade ago and pool-mined together with Litecoin. It is a coin the community embraced for its meme features but was never anything else beyond a meme.
It doesn't contain scarcity but is inflating, and while it is fast, it is not instant. It takes about a minute to transact with Dogecoin. Elon Musk selected Dogecoin as a payment method but probably miscalculated how Doge fees work.
The result was this:
The rise of Doge fees resembles BTC during 2017 and 2021 and demonstrates that Doge is not a viable means of exchange. Elon Musk selected two non-functional cryptocurrencies (BTC and Doge) instead of others that work without fees or speed issues.
There are many better options in the cryptocurrency field that contain the attributes of cash and can be used for fast and cheap transactions.
It is not just the mainstream focus on cryptocurrency that indicate a possible top. The mainstream attention can last for months and can keep increasing together with the prices.
A combination of factors will begin a downtrend, and of course, selling everything the moment a celebrity appears is not wise either.
Numerous "Financial (crypto) Analysts" Suddenly Appear
Most of them have no experience and no clue what they are talking about. It will be some wannabe trader experts or aspiring fund managers that treat crypto speculatively.
Some of these "traders" present basic (and non-profitable) trading patterns, draw some cool-looking lines, while talking excessively fast, and contain no seriousness or scientific method in their approach.
As crypto keeps rising more of these self-proclaimed experts appear and claim to be professional traders, offering no proof of profitability. It is an indicator the peak is closer, and they will all disappear afterwards.
Rise of Scams
One more indicator that gives us a solid signal the top is approaching. Scammers (and hackers) maximize their efforts in a booming market.
What better than an over-hyped market with millions of newbies arriving after watching a Crypto.com commercial and thinking they can make life-changing wealth by investing in rather dangerous and high-risk assets.
Scammers extract wealth with scam tokens offerings (ICOs), rug pulls, Ponzi schemes, fake or cloned websites, phishing, social engineering, and various other methods.
It is yet another indicator to consider as alarms of an overheated market should start rigging as scams are also rising.
The Best Time To Buy Cryptocurrencies
Buy When There Is Blood In The Streets
An expression that gives us an insight into the sentiment of markets and how investors will flock to buy or sell in two decisive moments according to every chart:
Most investors will Buy RIGHT AT THE TOP
Most investors will sell RIGHT AT THE BOTTOM
Warren Buffett made a fortune by investing contrary to the popular belief. He also coined the quote "be fearful when others are greedy, and greedy when others are fearful".
The overwhelming number of investors are clueless on what or when to invest and will buy right at the top, while also selling at the exact bottom.
Speculation and fear are driving emotional investors in and out of assets at the worst time possible.
It is not an exaggeration that most investors will buy the top, or exit at the lowest price possible.
(Volumes marked with a red cycle indicate an overheated market. The green cycles are a rare "buy the crash" (crypto is dead) opportunity).
The 2017-2019 BTC chart (Coinbase) proves this. Chances are a newcomer will just buy the top and panic sell during a market crash.
Volumes today are scattered as crypto is not only traded in the traditional cryptocurrency exchanges. With Wall Street, Canadian, and European Stock exchanges with ETFs, ETPs, etc. it is not easy to find clear trading volumes.
Grayscale volumes had been huge until January 2021, yet the secondary OTC market (OTCQX) had less interest in crypto than provisionally believed. Grayscale stopped offering new shares of cryptocurrency exposure but is now pushing towards a spot-ETF.
The volumes still are observable in cryptocurrency exchanges, and the best time to buy is when volumes have thinned a lot.
As investors we maximize our odds of succeeding by buying at a certain point when crypto is:
Not reached global hype
Not endorsed by celebrities
When everyone is fearful
When prices lost 80% from their recent heights
"Not every crypto will pump during the next bullish cycle, If a project has been around for 3 years but not much to show for, then...
A few that have consistently pushed development will thrive."
Although, CZ is only pushing his BNB/BSC agenda even with this message, and doesn't care for cryptocurrencies offering vast utility like Bitcoin Cash. Probably he considers anything that is working in this field a competitor. Thus, CZ, is not a friend of innovation in the crypto field, unless that innovation is far inferior to his project (BSC).
A pump is followed by a dump, so this message by CZ is speculative. Although, it also contains a message that can positively influence investors' into a better decision process.
Investors should be thinking long-term and follow the projects that push developments and thrive by offering a product (in this case a cryptocurrency) ready for global adoption.
Best Method to Buy: DCA
In part one, I've expressed the fact that dollar-cost averaging DCA is a valuable investing strategy, but will only be presented to beginner investors right at the top.
There are plenty of examples on Youtube on how to DCA correctly or, as I explained in the previous post, how to lose your money by "DCAing" new ATHs.
It is a valuable investment strategy when prices have crashed and are close to reaching a bottom or historic lows. It reduces the average losses after a next crash applies since the investor will buy again, this time more crypto with the same amount of cash.
It is an easy and logical investing strategy, although, as it happens with everything discussed, it is presented with the at the worst time possible by crypto "experts".
In Conclusion: When is the best time to buy crypto?
Nobody can tell the exact bottom or the exact top. We calculate the odds and invest accordingly.
DCA, though, is an excellent strategy under certain criteria.
Keep accumulating at this point, and only select projects that develop intending to achieve mass adoption.
I am focused on Bitcoin Cash for this reason.
Through my five years of experience with cryptocurrencies, I have found BCH to be the best bet, a cryptocurrency that can dominate in online and in-store payments.
Besides the vast merchant network of Bitcoin Cash acceptance, the smartBCH developments that add Metaverse features and compatibility, Bitcoin Cash retains the Bitcoin original features (scarce, tamper-proof, censorship-resistant, secure, reliable, and decentralized network), while achieving demanded scalability.
Bitcoin Cash upgraded Bitcoin following Satoshi's directions and has reasonable odds to achieve global adoption.
However, that doesn't mean there is only one option for investors. Bitcoin Cash is innovative, but it doesn't cancel the progress produced by other networks.
Lead Image From: QuoteInspector.com (free licence) - modified
Celebrities and Crypto - A Recipe for Disaster (Leo Messi, Kim Kardashian, and more!)
All material published in this content, is used for entertainment and educational purposes and falls within the guidelines of fair use. No copyright infringement intended. If you are, or represent, the copyright owner of images used in this article, and have an issue with the use of said material, please notify me.
Follow me on:
● ReadCash ● NoiseCash ● Medium ● Hive ● Steemit ●Vocal ● Minds ● Twitter ● LinkedIn ●Reddit ● email
Don't forget to Subscribe and Like if you enjoyed this article!
I hope I can invest on Crypto someday. Nice article, great work!