Cryptocurrency trading is a worldwide and continuous activity that presents various hurdles for traders. One of these challenges involves determining the optimal trading moments. Cryptocurrencies are known for their unpredictable price fluctuations, creating the perception that buying within certain time frames can lead to better deals. 

However true this maybe, due to the constant trading occurring across different time zones, pinpointing the perfect time to purchase cryptocurrency is not as easy as you think..

Key Takeaways

• Many investors, ranging from novices to seasoned individuals, purchase cryptocurrencies enticed by the excitement, the fear of missing out, and the accessibility.
• While specific time periods may be more favorable for cryptocurrency trading, the ideal time to buy crypto is when the buyer feels confident in their strategy and is financially prepared to take action.
• During weekends, there is often a significant drop in cryptocurrency prices, triggering a flurry of sell orders.
• Cryptocurrency markets experienced a decline on weekends due to reduced trading volume, closure of banks, liquidation of leveraged trades, and influential investors dominating the scene.
• Notwithstanding the weekend decline, it is anticipated that crypto markets will naturally rebound throughout the work week.
• Traders can capitalize on weekend volatility through various strategies such as scalping, purchasing during price dips, engaging in arbitrage, and employing range trading techniques.

What is Crypto Trading?

Cryptocurrency trading, also called crypto trading, involves speculating on the price fluctuations of cryptocurrencies through a Contract For Difference (CFD) trading account or by buying and selling the actual digital coins on a cryptocurrency exchange.

What is the Best Time to Trade Cryptocurrency?

It’s important to avoid investing more money in cryptocurrencies than you can afford to lose. Cryptocurrencies do not offer any guarantees of success or security, particularly when their value plummets. While there have been instances where individuals have earned substantial profits by making well-timed purchases, it’s crucial to acknowledge that luck often plays a significant role rather than solely relying on market timing skills.

What is the Best Time of Day to Trade Crypto

Due to the existence of different time zones, the majority of traders tend to operate during regular business hours. Day traders and scalpers focus on identifying the optimal time to purchase cryptocurrencies. This is important because their main objective is to take advantage of increased price fluctuations, which are more pronounced when market activity peaks.

Therefore, the ideal time to buy crypto is typically during the overlapping period of the busiest business hours worldwide. This occurs from 1 PM to 3 PM GMT, which corresponds to the overlap between European and American business hours, and from 11 PM to 1 AM GMT, which signifies the end of the American business day and the beginning of the Australian and Asian market hours.

Factors to Consider About the Best Time of the Day

When determining the optimal time of day for cryptocurrency trading, two factors play a significant role: the balance between supply and demand and the movement of capital.

Supply and Demand

The interplay between supply and demand largely influences the price fluctuations of cryptocurrencies. As a trader, your aim is to purchase cryptocurrencies at a low price and sell them at a higher price. According to the principles of supply and demand, prices tend to be at their lowest when demandis minimal and supply is abundant.

How does this affect the optimal time to purchase crypto?

Between 1 PM and 3 PM GMT, there is an overlap where European day traders are finalizing their trades, increasing the supply of crypto and subsequently lowering prices. Simultaneously, with the impending start of the American business day, the demand for crypto is expected to rise, leading to higher prices.  This is when you should plan to initiate a trade during this timeframe. In that case, relying on technical and sentiment analysis is advisable to guide your decision-making process.

The Movement of Capital

The fluctuation of prices in the crypto market is influenced by money movement within the cryptocurrency realm. The primary source of this movement comes from institutional and corporate traders who operate during local business hours. Typically, this occurs at the beginning and end of the business day in their respective time zones. Therefore, the opportune moment to initiate a trade is when one business day concludes and another commences.

The Best Time of the Week to Trade Cryptocurrency

Cryptocurrency prices tend to be lower when market activity is less intense. While you can trade cryptocurrencies anytime during the day, the market is typically more vibrant during regular work hours and less active during early mornings, nights, and weekends. Generally, cryptocurrency prices begin the week at lower levels on Mondays and gradually rise as the week progresses. However, as the weekend approaches, prices often experience a decline until market activity resumes the following Monday.

The Best Time of the Month to Trade Cryptocurrency

As time progresses, pricing patterns continue to evolve, with new trading trends impacting different cryptocurrencies’ prices. The dynamic nature of the crypto market presents challenges when it comes to timing your purchases. However, the end of the month is often considered the optimal time to buy.

Typically, prices tend to rise during the first ten days, followed by a subsequent price decline (likely due to increased selling) during the month’s latter half. It’s important to note that this pattern may vary for certain cryptocurrencies or smaller altcoins. Nevertheless, this trend exhibits reasonably consistent behavior based on the coins with the highest market capitalization rates.

What are the Best Time Frames To Trade Cryptocurrency?

• Traders who analyze the market using one-week charts are often skilled at assessing the broader picture.
• Swing traders can use the weekly chart to identify trends and then the daily chart to enter trades.
• Specific traders prefer the comfort of trading on shorter time frames, ranging from the 1-hour to the 1-minute chart.

How Crypto Trading Works

If you’re familiar with other types of markets, such as the stock exchange, you likely already understand how crypto trading operates. Most individuals enter the crypto market through a crypto exchange, where buyers and sellers conduct transactions involving digital assets.

These exchanges simplify trading by providing real-time values for various cryptocurrencies and facilitating trades by matching traders and investors. While investors can still spend time analyzing crypto charts, the exchange platform streamlines the overall trading experience. Hence, for most end users, the process is similar to buying or selling stocks.

Styles of Trading Crypto

The Continental Shift in Crypto Trading

Before the widespread adoption of cryptocurrencies gained momentum in the middle of 2020, crypto trading followed relatively straightforward patterns. Western institutions steered clear of crypto, while trading activities, including mining, were concentrated in Asia. Until 2021, the impact of Asian markets was so significant that bitcoin enthusiasts would be wary of the Chinese New Year in February, as miners would sell off large quantities of bitcoin, causing prices to drop.

However, these patterns have transformed. During the 2017 price surge, the sunrise in Japan held significance for bitcoin prices, but now that Wall Street has become more involved, much of the crypto action has shifted to the Western regions. Abundant data indicates that crypto trading activity aligns with traditional market hours in the United States, indicating a significant shift in crypto investment from East to West. The correlation with U.S. trading hours was particularly pronounced during the first quarter of 2022, reflecting a clear evolving trend.

Why Does It Matter to Trade During Global Market Open Hours When Crypto is 24/7?

Traditional stock markets operate for approximately 8 to 9 hours daily, Monday through Friday. In contrast, cryptocurrency trading remains open around the clock. However, experienced traders recognize that the most active trading occurs when global market activity is at its peak. It’s important to note that cryptocurrency liquidity tends to lower outside these peak market hours. This can lead to wider spreads and increased challenges when attempting to execute large trades or enter/exit positions.

Why Does Crypto Become Volatile on the Weekends?

In simple terms, weekends experience a decrease in active participation from experienced traders. Several factors contribute to the volatility of cryptocurrency prices, which can be advantageous for those who know how to leverage them.

Fewer Traders on Weekends

During the weekend, trading activity tends to be lower, with larger orders placed by individual investors. This indicates that significant players, commonly called “whales,” engage in substantial buying and selling to capitalize on price fluctuations.

For instance, a single tweet from Elon Musk about Dogecoin can cause its price to skyrocket during the weekend. In contrast, the lower trade volume observed on weekdays makes it challenging to achieve similar outcomes. When fewer trades occur over the weekend, the actions of these influential investors significantly impact the movement of a cryptocurrency.

The Banks are Closed

Cryptocurrency trading operates outside the typical work week and regular business hours. While this flexibility can be advantageous, it also poses certain challenges. For instance, on weekends, when traditional financial institutions like banks are closed, investors may face difficulties depositing funds into exchanges to take advantage of low prices.

Some individuals might consider using a credit card for crypto purchases. Still, this option may only be available in some jurisdictions. Even if it is accessible, transaction fees associated with credit card purchases can be significant and eat into potential profits.

Liquidation of Leveraged Trades

The weekends can be particularly volatile in cryptocurrency, partly due to large-scale liquidations involving billions of dollars. Leveraged trading, which consists of borrowing funds to amplify trades, introduces the concept of a “margin call.” This happens when the asset’s value drops below a certain threshold, prompting the borrower to repay the loan. If traders cannot return the borrowed assets due to the closure of many financial institutions on weekends and the inability to deposit fresh funds, exchanges may liquidate their holdings.

This adds to the selling pressure in the market. Additionally, automated selling triggers can create a chain reaction, leading to even more substantial liquidations than the already significant risks associated with leveraged trading. As more holdings are liquidated, the volume of sell orders increases, creating a challenging situation where meeting the margin call becomes increasingly difficult as prices continue to decline.

Cryptocurrency Trading Hours Vs. Stock Market Trading Hours

Unlike the stock market, which operates within set hours from Monday to Friday, the crypto markets run continuously, including weekends and holidays. While specific days or times may offer better trading opportunities due to varying levels of trader activity and market liquidity, it’s important to note that access to the crypto markets remains open at all times.

This means you can stay up-to-date with real-time crypto prices, adjust your portfolio, and refine your day-trading strategies even during odd hours, weekends, and holidays. The flexibility of crypto trading allows you to engage with the market whenever it suits you.

Crypto Investing Vs. Crypto Trading

When you delve into digital assets and explore buying and selling them, it’s essential to understand the distinction between cryptocurrency trading and investing in cryptocurrencies. Both approaches share a common goal: generating profits. However, the timelines for achieving these outcomes differ significantly. Investing in cryptocurrencies is geared towards medium to long-term gains, with investors typically holding onto their assets for months or even years.

On the other hand, cryptocurrency trading focuses on shorter to medium-term gains, with traders maintaining positions for durations ranging from mere seconds to several weeks. The choice between trading and investing depends on your preferred time zone and approach to the crypto market.

Does the Global Market Affect Crypto Trading?

The relationship between the global market and crypto trading is complex, and we are still trying to understand it fully. While cryptocurrencies operate independently from traditional trading markets, they are not entirely immune to their influence. As an investor, you might have observed how fluctuations in other markets can impact the value of your crypto investments. A notable example of this was seen in 2022, when a general downturn in the overall market also affected the crypto markets, resulting in what was referred to as the “crypto winter” of that year.

Additionally, the collapse of prominent crypto companies like FTX in late 2022 had repercussions in the global markets, causing some investors to incur losses and potentially altering their investment decisions in other areas, thereby creating a ripple effect throughout the markets. These instances highlight the interconnectedness between market sectors and the need to consider the broader economic landscape when engaging in crypto trading.

The Multi-Time Frame Trading Strategy for Crypto Trading

You can utilize multi-timeframe analysis in several ways to optimize your crypto trading strategy. One popular approach is to display two charts simultaneously on separate screens or windows. This allows traders to quickly refer to the long-term trend while making decisions about short-term positions. Professional traders often use multiple monitors at their trading stations, enabling them to observe various time frames simultaneously.

Another method is to examine technical indicator values across different timeframes. For instance, you might notice that the Relative Strength Index (RSI) on a 1-day chart indicates a bearish trend, while the RSI on a 1-minute chart suggests a bullish trend. In such cases, you can focus on the 1-day RSI value specifically (rather than analyzing the entire chart) to determine the direction of your trades on the 1-minute chart. By leveraging multi-timeframe analysis, you can gain valuable insights into market dynamics and make more informed trading decisions.

Chase the Whale Strategy to Trading Crypto

Large-scale price movements in the market are heavily influenced by influential individuals or groups known as “whales.” These whales possess significant funds that they utilize for trading purposes. Some whales act as “market makers” by placing bids and asks on both sides, thereby enhancing liquidity for a particular asset and generating profits for themselves. Whales are in various markets, including stocks, commodities, and cryptocurrencies.

When formulating a cryptocurrency trading strategy, it is crucial to consider the tools and techniques these whales favor, such as their preferred technical analysis indicators. Essentially, whales possess substantial knowledge and expertise in their trading activities. By anticipating the intentions of whales, traders can align their own strategies with those of these experienced market participants, potentially capitalizing on profitable opportunities.

Some Considerations for Crypto Traders

When trading in the crypto markets, it’s important to consider some factors that distinguish them from traditional assets like stocks or forex. One key consideration is the level of liquidity for different crypto assets. Unlike stocks or forex, certain crypto assets may have limited liquidity, making shorter timeframes less useful. For example, an asset that only trades sporadically every few days may not provide meaningful data on a 1-minute or 1-hour chart. Traders should carefully assess liquidity when choosing suitable crypto assets that align with their trading style.

Additionally, being aware of event-driven occurrences in the crypto space is crucial. Events such as hard forks r algorithm changes can disrupt the usual patterns and render technical analysis less reliable. It’s essential to stay informed about upcoming events that could impact the market and introduce added directional risks. If you prefer to avoid such risks, refrain from trading during these event-driven periods. By staying informed and considering these factors, traders can better understand the crypto markets and make informed decisions.

Final Thoughts on the Best Time to Trade Crypto

Timing the cryptocurrency market can be challenging due to its inherent volatility. However, certain periods offer more favorable conditions for buying cryptocurrencies. The ideal timeframe for trading crypto depends on your chosen trading approach and personal goals.

Finding a time frame that suits your comfort level and aligns with your trading style is crucial. Exploring different time frames and evaluating their effectiveness in achieving your objectives may be helpful. You can discover the optimal trading timeframe that works best for you through experimentation and observation.