Cryptocurrency trading is characterized by high volatility and extreme price volatility
Trading is increasingly based on Wall Street trading hours
Avoid trading on the weekend
Cryptocurrencies are notorious for the extreme volatility that accompanies their trading. It is often difficult to predict what causes prices to go down or up, as just one tweet from Tesla Chairman Elon Musk was enough to move Bitcoin & Co’s double-digit price swings (in both directions). Cryptocurrencies are often more extreme than they are in the stock market. Double-digit losses or gains over a short period of time are not uncommon, making it difficult to know when to buy or sell cryptocurrencies. However, the statistics provide some clues as to the approximate criteria that a trader can follow in order to have the best possible time to trade cryptocurrencies.
Similar to the gemsehndler on the weekly market, it is also important for the cryptocurrency trader to find the moment when the liquidity and market volume are the highest possible. While liquidity is not a concern for those who want to invest only small amounts in cryptocurrency, exchange portal CoinDesk recommends using more established crypto platforms because these apps are more protected from manipulation or the effects of large buy or sell orders.
Moving from Asia to the United States
But when specifically are they traded in the markets? In the past, the cryptocurrency market was specifically geared towards Asian markets. The reason for this is that Bitcoin & Co. It was mined especially in Asian countries and cryptocurrency trading also gained momentum here very early on. As Quantum Economics CEO Matty Greenspan commented on CoinDesk, “In March 2017, the dawn in Japan was a big thing for the price of bitcoin.” Crypto bulls have also feared the Chinese New Year in the past, according to DerStandard, as there have been price losses for years because gifts of cash are often given during the holidays, which is why investors are increasingly pulling back from their cryptocurrency investments.
However, this trend has since disappeared. The background is the relocation of the cryptocurrency market from Asia to the United States. China in particular is taking the cryptocurrency case to court harshly – the refinement and circulation of cryptocurrency is now banned there. On the other hand, Western institutions have now opened their doors to Bitcoin & Co. Cryptocurrencies are now considered profitable, although high-risk investment is respected and sometimes finds its way into the portfolios of large investment banks.
This can also be seen from the volume of cryptocurrency trading. According to DerStandard, this increases reliably at the start of Wall Street trading and peaks between 3:30 PM and 4:00 PM CET. On the other hand, trading volume when US markets close (22:00 CET) is rapidly decreasing. As Coin Metrics tells CoinDesk, this correlation was stronger in the first quarter of 2022. With whom you are trading bitcoin you should definitely keep these times in mind.
It is better not to trade on the weekend
Unlike stock exchanges, cryptocurrency trading does not stop even on weekends. However, cryptocurrency trader and market analyst Cantering Clark CoinDesk recommends refraining from trading Bitcoin & Co. during the weekend. Therefore, lower trading volume would make the cryptocurrency market more vulnerable to manipulation: “The weekends in old markets like forex were thinner and thinner. Knowing this, banks are pushing the market to force moves. The same can be seen in cryptocurrencies, which is why in that any weekend activity has been wrong and unsustainable for long. Never trust a weekend to be something to consider.”
DerStandard also used data from BitcoinMonthlyReturn to determine that since 2010 the price of bitcoin has been mostly weak in September and March, while according to statistics, it was most likely to rise in April, May, October and November. However, such statistics are not reliable indicators of future earnings, especially since the original electronic currency is still very recent, which means that the data situation is still quite manageable.
Severe fluctuations in gas shipments
Finally, trading with DeFi currencies such as Ethereum should be discussed. This is where transactions are subject to so-called gas fees, which fluctuate greatly depending on the current use of the network. Anyone who trades only small amounts but completes a trade in a timely manner can quickly face fees that exceed even the negotiated amount. So it is very important to have a good entry and exit point here. Here, too, it is worth taking a look at the stats. As Flipside data scientist Conor Higgins explained to CoinDesk, “If we look at hourly fees, we see fewer but greater transactions at midnight ET.” [Eastern Time, 5 Uhr morgens MEZ, Anmerk. d. Red.]More activity around 5 p.m. ET [22 Uhr MEZ, Anmerk. d. Red.]Which has always been the most precious time to negotiate.”
However, this has now moved to the point where more market participants will try to take advantage of less active times for transactions, which in turn will result in higher fees during what were considered more favorable times. However, according to data analytics firm Nansen, it can also be seen that trading volumes on the two largest cryptocurrency exchanges, Coinbase and Binance, will increase during trading hours on US exchanges.
Financeen.net editorial staff
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