We all know that the crypto market is fluctuating constantly and we often see the growth of other cryptocurrencies when some others are just falling. We wonder if we haven’t missed the best time to sell crypto and get much profit from our investment.
It’s crucial to consider when to sell cryptocurrency in addition to when to buy it if you want to maximize your chances of success. We’ll be discussing the following topics, so feel free to jump in anytime:
- The scientific study behind knowing when to sell your crypto
- When is a good time to sell crypto
- When NOT to sell your cryptocurrency
- Factors to consider before selling cryptocurrency
Is there a scientific study behind knowing when to sell your crypto?
Two years worth of Bitcoin buying and selling data were examined in-depth. The results were quite unexpected. The best day of the week to sell and buy was determined by looking at the average weekly market cycle.
In a two-year analysis of Bitcoin hourly price data, Longhash discovered some very intriguing trends in price movement and trading volume. Their research’s data came from CryptoDataDownload.
The study’s methodology involved calculating the average price for each hour of each week for open, close, high, and low.
Right time of day to sell cryptocurrency
As an illustration, they determined the average price by taking the highest price every Monday at six in the morning. Over the course of two years, they performed this during the market’s peak trading hours every day of the week. I’m sure it required a great deal of effort.
The researchers discovered that on Fridays at 6 am UTC (Coordinated Universal Time), the average price of Bitcoin was at its lowest. This indicates that generally speaking, now is the perfect time to enter a long trade.
Don’t take these results as absolute truth because the Bitcoin market is extremely volatile and may not always follow an overall average. It is merely cryptocurrency market analysis; it is not investment advice.
The researchers also discovered that, on average, the Bitcoin prices were 170 dollars higher on Mondays and Tuesdays around midnight UTC than it was on Fridays.
Accordingly, one of the best ways to do that is to cash out your Friday long position on Monday or Tuesday or to take a short position to cash out on the following Friday, when there are statistically lower prices.
When is the best time to sell crypto?
The following scenarios are when you should think about liquidating your cryptocurrency investment:
You no longer think it will be successful in the long run.
Understanding when to reduce your losses is a necessary component of crypto trading. This can be challenging because people frequently have strong feelings about the cryptocurrencies they purchase. It’s crucial to avoid becoming overly devoted to any crypto project because of this. Here are a few warning signs that a cryptocurrency could be losing value:
- You aren’t confident in the management group.
- Its supporting community is getting smaller and smaller.
- There isn’t much development and updates taking place.
Better investment opportunities have been discovered.
Blockchain technology and cryptocurrencies are developing quickly. In terms of transaction processing, Litecoin launched in 2011 and marked a significant improvement over Bitcoin. Since then, Litecoin has been overtaken by a plethora of fresh cryptocurrencies.
Selling makes sense if another cryptocurrency has outperformed one of your current holdings in a crucial area. You can leave before it ends up losing too much ground and save money to put into a better investment.
Since you purchased it, the value has increased by two or three times.
If the value of Bitcoin has increased significantly, you should probably sell at least some of it. You could, for instance, sell your initial investment and play with the proceeds moving forward.
Profits can disappear quickly due to how unstable cryptocurrencies are. Use a portion of your profits to protect yourself from future losses.
When NOT to sell your cryptocurrency
When it comes to selling cryptocurrency, the first thing you have to remember is, that there are no set rules. The most crucial thing to keep in mind in this situation is to resist the urge to sell quickly just because the price has decreased. Keep it if you still believe it will be valuable in the future.
Selling in a panic is a choice that many crypto traders come to regret. They invest in cryptocurrencies when there is a higher price, sell when it falls, and lose out if the price rises again.
Sell your cryptocurrency if the price has fallen and you no longer consider it to be a wise investment strategy. A price decline shouldn’t, however, be the only factor in a sale.
Factors to consider before selling cryptocurrency
The following are the key factors to take into account before selling cryptocurrency:
What will you sell for?
Even if something’s value has increased, you don’t have to sell it all. If you still believe that the cryptocurrency will be successful in the future, you could sell a portion of your holdings to rebalance your portfolio and keep the rest.
What effects does this have on taxes?
You must pay cryptocurrency taxes if the value of the cryptocurrency has increased. If you held the cryptocurrency for longer than 365 days, it was taxed as long-term gains. Compared to short term gains, which are taxed as ordinary income, long-term investment gains have lower tax rates.
Consider delaying selling your crypto until after it reaches that long-term gains threshold if you’re approaching the end of the year.
My Final Takeaway
The best thing to do to sell cryptocurrency is to feel when you are confident that you will no longer want to hold your coins.
If you can’t wait for the coin to increase in value, then it is not a good idea to sell it now. You should always be ready to hold on to your coins for at least a year, and preferably longer than that if possible.
There are always difficult decisions to be made in cryptocurrency trading, whether you do it for fun or for a living. Even though you might not always make the best decision, it’s important to do so without looking back. Even when the results aren’t in your favor, clarity goes a long way.
Cryptocurrency is a digital currency that is created, used, and traded electronically. This currency is not controlled by any bank or government and is transferred directly between people through the internet. Cryptocurrency can be used as an investment, as a method of payment for goods and services, and as a store of value.
The value of cryptocurrency is determined by market trends just like other currencies: supply and demand. This means that crypto prices fluctuate based on what people are willing to pay for them at any given time.
In order to be one of the successful day traders, always start out slowly, implement the right risk management, figure out the best trading strategy for you, and with a goal in mind. Although doing extensive research and proper portfolio management is beneficial, you are the only one who can choose when to sell your cryptocurrency.
What do you think? When is the best time to sell crypto? Let me know in the comments.
If you like to start day trading, Check out Martina’s Learn to Trade & Invest Crypto Academy platform to get access to all content and resources, our trading community, and 2 Zoom lives with her every month. Try it out for 2 weeks 100% FREE!