Bitcoin has performed poorly after hitting an all-time high in November 2021. Bitcoin’s value fell from nearly $70,000 to below $18,000 as worries about a recession grew. At the time of writing, BTC is trading at around $20,000, giving it a market capitalization of over $377 billion.
Bitcoin has struggled as investors fret over rising interest rates, soaring inflation, and governments scaling back fiscal stimulus. Therefore, in this article, we will look at some strategies to help you determine whether to buy Bitcoin or not as it consolidates at $20,000.
Some of the strategies highlighted are the use of cryptocurrency trading robots, technical analysis, and chart analysis.
1. Buy Bitcoin using technical analysis
The most common strategy for knowing when to buy Bitcoin is to use technical analysis. It is a method of analysis that involves the use of technical indicators such as moving averages and Bollinger bands.
One way to use moving averages is to find when there is a crossover between a long and a short. For example, you might have a 25-day moving average and a 50-day moving average on a Bitcoin chart. In this case, when the two crossover, it can be a sign that buyers are coming back and the coin will continue to rise.
Additionally, you can use oscillating indicators that identify oversold and overbought levels. Examples of popular oscillators are Stochastics, Commodity Channel Index (CCI), and Relative Strength Index (RSI).
2. News and macro events
Additionally, you can also determine if you want to buy Bitcoin by simply looking at key macro events. For example, you can view economic data on inflation and the labor market. In most cases, high inflation and low unemployment usually cause the Federal Reserve to adopt a more hawkish monetary policy.
In most cases, an extremely hawkish Fed usually drives the prices of Bitcoin and other risky assets down sharply. For example, Bitcoin fell sharply in 2022 as the The Federal Reserve decided to increase interest rate and end its quantitative easing.
Therefore, you should always focus on the latest macroeconomic events and Federal Reserve news.
If the hike becomes dovish, it could be a good sign to buy Bitcoin. In addition to the Fed, certain fiscal policies such as stimulus packages can also have a positive impact on BTC prices. For example, Bitcoin prices surged during the pandemic as the federal government provided stimulus worth trillions of dollars.
3. Buy bitcoin using crypto charts
Chart analysis is another approach to determining whether to buy Bitcoin. It is a process where you study charts and identify chart patterns. There are two main types of patterns: reversal and continuation.
Reversal chart patterns indicate that the price of a coin will change direction while continuation patterns indicate that the existing trend will continue. Examples of reversal patterns are head and shoulders, double and triple tops, and rising and falling wedges.
On the other hand, some of the most popular continuation patterns are the bullish and bearish flags and the cup and handle.
In addition to these, there are candlestick patterns that can tell you when to buy Bitcoin. Examples of bullish candlestick patterns are the hammer, doji, morning star, and bullish engulfing.
It is also possible to integrate the use of trading robots into the chart analysis. For example, some robots are based on trend-following analysis. In this case, a bot can be designed to analyze and find a chart pattern like a bullish or bearish flag. As a result, the bot will initiate a bullish trade when it spots the pattern.
4. Use cryptocurrency trading robots
A popular method of determining if the time is right to buy Bitcoin is through the use of trading robots. A bot, also known as an expert advisor, is software that analyzes chart patterns and then determines whether to buy or sell a cryptocurrency.
Trading robots are created by combining several market approaches. Some are created to analyze the market using technical indicators such as moving averages, Relative Strength Index (RSI) and Relative Vigor Index (RVI). These indicators perform analysis and predict whether the price of an asset will go up or down.
Other trading robots are designed by combining technological aspects such as artificial intelligence (AI) and big data analysis. For example, a bot will analyze the market and identify positioning patterns among participants. It will then analyze this data and predict whether it is ideal to buy or sell BTC.
There are several advantages of using trading robots like Prime binary code in the crypto space. First, these robots work all day. Moreover, these bots have different risk management tools like stop-loss and take-profit.
Robots also have some drawbacks. For example, some robots may not perform well when market conditions are too volatile. Some are created to perform well in times when the markets are trending, while others are designed for volatile markets.
Also, not all crypto trading robots accept all cryptocurrencies. Some of them just allow you to trade Bitcoin only while others allow you to trade other different cryptocurrencies and assets.
Also, depending on market conditions, some trading robots may predict the best time to buy or sell better than others. For these reasons, you should always do some research before choosing your robot, as not all trading robots work the same and each has a unique trading strategy.
5. Portfolio Trackers
Portfolio monitors are an absolutely useful tool! Wallet trackers are the most commonly used crypto tool and will help you track your wallet. You can see the total value of your investments, the evolution of your portfolio’s value over 24 hours and the performance of individual coins in your portfolio at a glance.
If you notice that a coin is hurting your wallet, you can decide what to do about it. This will help you mitigate risk and maintain profit generation. This will help to protect you from overfishing rising assets, to continue generating profits.
For example, if you want your BTC to still be worth 10% of your wallet, but the price of BTC rises, increasing its value to 30% of your wallet, you can rebalance your risk by selling eth and booking benefits right away. .
How to Identify the Right Time to Buy or Sell Crypto?
A common question among most traders and investors is how to identify the right time to buy and sell cryptocurrencies. In this article, we’ve looked at some of the most popular strategies to use.
While not all of them are perfect approaches, they will provide a good way to determine when to buy or sell BTC and other coins. It is always recommended to use risk management strategies like having a stop-loss, reducing leverage and adopting good position sizing strategies.