Everybody Discussing About Bitcoin & Crypto – Is It The Correct Time?

Disclaimer: The content provided is for informational and educational purposes only and should not be considered as investment or financial advice. Investing in Bitcoin and other cryptocurrencies carries risks, and investors should conduct thorough research and consult with a financial advisor before making any investment decisions.

It’s worth noting that Bitcoin’s price has seen significant growth over the years, and especially in 2024, with ETFs and big money entering in the last few months, no doubt that is the main reason everyone is talking also some investors expressing regret for not buying more at lower prices. This sentiment underscores the volatile and unpredictable nature of cryptocurrency markets, where timing is crucial.

My Quick Opinion For Short Term & Longer Term In Current May & June Weeks:

For the short term I think it might be FOMO to start putting the money in Bitcoin these days due to its price nearing all-time highs, instead I would go with other ALT coins might be better choices and have potential and can provide additional value in the industry.

• Strong Use Case: Look for cryptocurrencies that solve real-world problems or offer unique technological advancements. Coins with a clear and compelling use case are more likely to gain long-term value. Look for those having partnerships with big firms to tackle their daily challenges.
• Active Development: Check if the project has an active development team and a transparent roadmap. Frequent updates and community engagement indicate a commitment to the project’s future.
• Market Position: Analyze the coin’s market position and its potential to capture or create a niche market. A coin that carves out a space for itself in a growing sector of the cryptocurrency market can be a smart pick.

Do you know: Robert Kiyosaki, author of “Poor Dad Rich Dad,” said that Bitcoin is a real asset that investors should seek as the bond market crashes. This sentiment reflects a belief in Bitcoin’s value as a hedge against traditional financial market instability.

Timing Your Bitcoin/Crypto Investment

Thinking about investing some amount in Bitcoin? I know recent investments in Bitcoin lead to much discussion among traders and the general public as well. As more institutions and companies get involved with Bitcoin and economic conditions drive demand, many people wonder if now is a good time to invest in this currency. I am giving you some educational ideas that might help you understand more about this:

Understand Market Cycles 

The Bitcoin market goes through cycles, just like traditional markets. There are times when prices go up (bull market), times when prices go down (bear market), and times when prices don’t change much (accumulation phase).

• Bull Markets: Bitcoin prices rise quickly during bull markets because of a lot of demand, and investors feel optimistic. If you bought Bitcoin earlier, these can be good times to make profits.
• Bear Markets: In bear markets, prices fall, often due to negative news, concerns about regulations, or a general market downturn. While challenging, these times allow you to buy more Bitcoin at lower prices.
• Accumulation Phases: Bitcoin prices remain relatively stable and move within a narrow range in the accumulation phase. Traders say this might be a good time to buy more Bitcoin before the following potential price increases gradually.

And my opinion is currently we are in the middle of the bull market.

Impact of Halving Events

The last halving event was just in April 2024, as Bitcoin’s supply is limited, and every four years, the reward for mining new bitcoins is halved, an event known as the “halving.” These halving events have historically been followed by significant price increases, as the reduced supply of new bitcoins creates scarcity and potentially drives up demand. The price surge is not instant like after halving event the next day Bitcoin will pump 25%, 50% or like that but it increases gradually.

Dollar-Cost Averaging (DCA) Strategy

To reduce the impact of price swings, altrix-edge.org suggest to use a dollar-cost averaging (DCA) strategy. With DCA, you invest a fixed amount of money into Bitcoin regularly, regardless of the price. This way, you don’t risk buying everything at the highest price.

Let me explain DCA strategy with an example

Let’s say Sarah decides to invest in Ethereum using the Dollar-Cost Averaging (DCA) strategy. She plans to invest $200 in Ethereum every month for a year, regardless of the price of Ethereum at each purchase date. Here’s how her investment might look over the first few months:

• Month 1: Ethereum price = $1,000 per ETH. Sarah buys 0.2 ETH for $200.
• Month 2: Ethereum price = $800 per ETH. Sarah buys 0.25 ETH for $200.
• Month 3: Ethereum price = $1,200 per ETH. Sarah buys approximately 0.1667 ETH for $200.
• Month 4: Ethereum price = $1,100 per ETH. Sarah buys approximately 0.1818 ETH for $200.

After these four months, Sarah owns about 0.7985 ETH. The total amount she spent is $800. The average cost of her Ethereum purchases is: Average cost per ETH=Total amount spentTotal ETH purchased=8000.7985≈$1002.51 per ETH\text{Average cost per ETH} = \frac{\text{Total amount spent}}{\text{Total ETH purchased}} = \frac{800}{0.7985} \approx \$1002.51 \text{ per ETH}Average cost per ETH=Total ETH purchasedTotal amount spent​=0.7985800​≈$1002.51 per ETH

Benefits of Sarah’s DCA Strategy:

• Reduces the impact of volatility: Sarah’s average cost per Ethereum is $1,002.51, smoothing out the highs and lows of the market prices at which she bought.
• Removes emotional investing: Since Sarah invests a fixed amount regularly, she avoids the stress of trying to time the market.
• Builds investment discipline: This strategy helps Sarah stay committed to investing a fixed amount regularly without being swayed by market conditions.

Scalping Strategy

Scalping is a trading strategy used primarily by making a large number of trades that each aim to profit from small price changes. As a scalper, you would be entering and exiting trades rapidly, sometimes within minutes or even seconds. This method focuses on small, quick gains over an extended number of trades, which can add up to significant profits at the end of a trading session.

How Does Scalping Work?

Here’s a step-by-step breakdown of how scalping works in practice:

1. High Frequency: You engage in many trades throughout the day to exploit minor price differences.
2. Small Profit Targets: Each trade targets a small profit, ranging from a few cents to a few dollars, depending on the asset’s price and market conditions.
3. Quick Decisions: Decisions to buy or sell are made quickly, based on real-time analysis of market trends and price movements.
4. Technical Analysis: Scalpers heavily rely on technical analysis and real-time charting tools to identify opportunities for quick entry and exit.

Example Scenario of Scalping in the Forex Market

I have taken EUR/USD example to explain with more simplicity.

Imagine you are trading EUR/USD in the forex market, aiming to use scalping as your strategy. Here’s how a typical scalping session might unfold:

• Step 1: You start your trading session by analyzing the EUR/USD pair using a 1-minute or 5-minute chart to spot immediate trends or price spikes.
• Step 2: At 10:00 AM, you notice a small uptrend and decide to buy 100,000 units at 1.1800.
• Step 3: By 10:03 AM, the price moves up to 1.1805, and you quickly sell to capture a 5-pip gain.
• Step 4: Throughout the day, you repeat this process, making numerous trades and accumulating small profits that add up.

Calculating Your Earnings:

• Trade 1: Buy at 1.1800, sell at 1.1805. Profit = 5 pips.
• Assume each pip is worth $10: Your profit for this trade is $50.
• After 20 similar trades in a day, each capturing 5 pips: Total profit = 20 x $50 = $1,000.

Note this is not that easy as it looks in the example.

Benefits of Scalping:

• Market Independence: You can profit from small price movements, regardless of the overall market direction.
• Less Exposure to Risk: By staying in positions for a very short time, you reduce the exposure to big market moves.
• Compounding Small Gains: Numerous small profits can compound into substantial earnings by the end of the day.

Long-Term Holding (HODL)

The “HODL” (Hold On for Dear Life) strategy involves buying and holding Bitcoin for the long term, believing that its value will appreciate over time. This approach can be practical for investors with a high-risk tolerance and a long-term investment horizon.

Diversifying Your Portfolio

As with any investment, diversification is crucial. Investors can consider allocating a portion of their portfolio to Bitcoin while maintaining exposure to other asset classes, such as stocks, bonds, and real estate, to mitigate overall risk.

Let’s say you’ve got $10,000 to invest. Putting all of it into one type of investment, like stocks or Bitcoin, can be a bit risky. Instead, why not spread it out a little to balance things out? Here’s how you might think about it:

10,000 across different types of crypto investments to manage your risk better and possibly enhance your returns:

• Bitcoin ($3,000): Start with $3,000 in Bitcoin. It’s like the gold standard of crypto—widely recognized and potentially a safer bet compared to the new kids on the block.
• Ethereum ($3,000): Then, how about putting another $3,000 into Ethereum? It’s not just a cryptocurrency; it’s also a platform for building decentralized apps, which means it has a lot of growth potential.
• Altcoins ($2,000): You could put $2,000 into a couple of promising altcoins—maybe something like Solana and Cardano. They’re a bit more of a gamble but could pay off big if they hit their stride.
• Stablecoins ($2,000): Consider $2,000 to stablecoins like USDC, FDUD or Tether. For your DCA so in case the market gets a short term dip you can go for DCA.

Few Things To Consider:

Always Follow the Latest News and Trends

Gross Domestic Product (GDP)

• Indicator of: Overall economic activity.
• Market Impact: If GDP growth is higher than expected, it suggests a strong economy, often leading to stock market gains and a stronger domestic currency. If it’s lower, the market might fall due to concerns about economic health.

Consumer Price Index (CPI)

• Indicator of: Inflation at the consumer level.
• Market Impact: Higher-than-expected CPI usually leads to fears of rising inflation, potentially causing central banks to raise interest rates, which can boost the currency but may negatively impact the stock market.

Producer Price Index (PPI)

• Indicator of: Inflation at the production level.
• Market Impact: Like CPI, a higher-than-expected PPI suggests inflationary pressures which might prompt interest rate hikes, affecting both currency and stock markets.

Unemployment Rate

• Indicator of: Joblessness in the economy.
• Market impact: A higher-than-expected unemployment rate typically indicates a struggling economy, leading to stock market declines. Conversely, lower rates suggest a robust economy, boosting market optimism.

Non-Farm Payrolls (NFP)

• Indicator of: U.S. employment data excluding farms and a few other job classifications.
• Market Impact: Strong job growth (higher than expected) signals a healthy economy, usually boosting the USD and stocks; weaker data can lead to market declines.

Federal Reserve Interest Rate Decisions

• Indicator of: The direction of U.S. monetary policy.
• Market Impact: Rate hikes can strengthen the USD as they offer higher returns on U.S. assets; however, they might suppress stock markets. Rate cuts usually do the opposite.

Retail Sales

• Indicator of: Consumer spending.
• Market Impact: Higher-than-expected retail sales can indicate a strong economy, positively influencing the stock market and currency value. Lower figures may indicate economic troubles, leading to declines.

Manufacturing Purchasing Managers’ Index (PMI)

• Indicator of: The economic health of the manufacturing sector.
• Market Impact: A PMI above 50 indicates expansion, often seen as positive for the stock market and currency. Below 50 suggests contraction, which can depress markets.

Consumer Confidence Index

• Indicator of: How optimistic consumers feel about their financial situation and the state of the economy.
• Market Impact: High consumer confidence typically leads to increased spending and a bullish stock market. Low confidence can signal impending recessionary pressures and market downturns.

Housing Market Data (e.g., New Home Sales, Building Permits)

• Indicator of: The health of the housing market.
• Market Impact: Strong housing data usually boosts stock market sentiment and can strengthen the currency due to associated economic activities. Weak data can be a sign of economic slowdown.

• The Bitcoin market is constantly changing due to new technologies, regulations, and investor sentiment.
• Stay informed by following trustworthy news sources, industry blogs, and social media channels focused on cryptocurrency news and analysis.

Monitor Market Sentiment

• Market sentiment refers to the overall mood and expectations of investors.
• Analyzing market sentiment can provide valuable insights into potential price movements.
• Tools like sentiment analysis and social media monitoring can help gauge investor sentiment.

Adapt to Market Changes

• As the Bitcoin market evolves, investors need to be prepared to adjust their investment strategies and portfolio management approaches.
• New regulations, technological advancements, and market shifts may require changes in investment tactics.

Learn from Historical Data

• Historical market data, including past bull (upward price movement) and bear (downward price movement) cycles, can help investors identify patterns.
• Understanding market dynamics from historical data can inform future investment decisions.

Final Thoughts

Investing in Bitcoin requires a deep understanding of the asset, timing strategies, associated risks, and practical investment approaches. From market cycles and halving events to cybersecurity threats, it’s too much. Bitcoin is known for its high volatility, with prices capable of experiencing significant swings in short periods. This volatility can be both a risk and an opportunity for investors but requires careful management and risk tolerance.

Bonus Tip: Keeping Emotions in Check. The volatility of the Bitcoin market can lead to emotional decision-making, such as buying at peak prices or selling during market dips. Never do that.