The best way to maximize profits as a bitcoin trader is to buy when the market is down but this isn’t the case as shown by reports from trading activities.
Many popular cryptos’ prices have plunged dramatically. According to CoinMarketCap statistics at the time of writing, the worldwide crypto market valuation has decreased to $1.04 trillion, down from an all-time high of about $2.9 trillion in November 2021. Bitcoin’s (BTC) price has dropped below $30,000 again, down more than 50% from its all-time high of over $67,000. Bitcoin’s price on worldwide markets was $25,730 at the time of publication.
The prevalent action in the market, as seen from the fall of trading volumes, is that several people avoid the market when it is relatively down because of beliefs that it may even go further down. Apart from that reason, a lot of people also get very emotional due to the rise and spread of fear, uncertainty and doubt (FUD), thereby missing what we can term ‘the best time to buy the bottom.’
How Is the Bear Market the Best Time to Buy Bitcoin?
The price of bitcoin has climbed steadily over the last three years, from just under $10,000 to a peak of $66,000 in late 2021. Before taking a dive, it was trading sideways between $55,000 and $40,000 for several months. Even for those who are accustomed to bitcoin’s volatility, the sharp drop was disturbing, but it was an entirely new experience for latecomers.
Unlike most newcomers, investors who are well-grounded in trading bitcoin know better than to jump in when its price is making new highs. The best time investors that understand the market buy more is when the price is seemingly very low. This way, when the markets start to rally upwards, and people start jumping in because of FOMO (fear of missing out), they on the other hand would be taking profits.
It is a normal human feeling to respond to any market, but the crypto market, in particular, is dominated by fear and greed. The price of bitcoin has gone through several downtrends; for example, when it fell below $4000 in March 2020, many people were afraid and waited for further downside, but it steadily increased until it became a frenzy and everyone was rushing into the bull trend. Those that bought at the $4000 price were the most lucrative at the time.
Why You Should Consider Investing When the Market Is Down
It has already been stated that the bear market brings a great opportunity for investment as most of the top crypto and even promising crypto projects are at a very affordable price. For example, in the last major bull market, the price of BTC went as high as $66k a point where someone who bought BTC during the bear market before preceding that would be looking to take profit.
Another advantage of investing during the bear market is that most shallow project without real value do not survive the bear market. During a bull market, any and everything that launches does well. Wether it is a sham, empty or hollow project. People buy in looking to make quick gains and most of these projects just ride on the wave of the bull market, thereby attracting unsuspecting investors.
Projects that withstand the test of time during the bear market often do well during the bull market. This is because it takes a project with real value to stand during the bear market. It shows that the founders, the community, and even the use case of the project is very well present and active.
Final Thoughts
Smart investors recognize and benefit from the emotions associated with trading cryptocurrencies, buying when the market is relatively quiet and selling when the market is in a frenzy.
While we may not be certain that this is the bottom of the market and that the price of bitcoin will not dip any further, it is still relatively better to invest now when the market is down than when the frenzy resumes.
This article’s content is entirely the author’s opinion, and it in no way serves as financial advice.
