What is the best time of day to trade cryptocurrency

Cryptocurrency is a volatile asset class that experiences a lot of ups and downs. People often get the idea that they should try to time their investments by purchasing within specific windows to get the best possible price. However, because cryptocurrency is traded 24 hours a day by investors around the world, timing a cryptocurrency buy is never cut and dried.

If you want to invest in crypto, your best bet is to practice dollar-cost averaging, or buying a little bit at a time over an extended period. Even if you invest at intervals that turn out to be not all that low, you will catch others that are very low, and things may average out.

There are ebbs and flows to the crypto market that vary wildly depending on the specific cryptocurrency you’re buying. Tokens may trade with yet another pattern. For someone intent on timing a crypto purchase, it will pay to really analyze the history of specific investment types.

A person sits in front of two computers with crypto exchange charts on them.

Image source: Getty Images.

When is the best time to buy cryptocurrency?

To make it short and sweet, the best time to buy a cryptocurrency is when you’re ready to buy a cryptocurrency. Using the dollar-cost averaging approach, you’ll be able to control the volatility of your investment (at least to some degree) and avoid the roller coaster ride.

Never put more into a crypto than you’re willing to lose. They are not guaranteed winners or asset classes that provide any sort of security, especially if they tank. Some people have made significant amounts of money on the right buy at the right time, but it’s often more about luck than astutely timing the market.

Best time of the day to buy cryptocurrency

Because crypto trades all day long, even into the wee hours of the morning (no matter where you happen to live), timing your trades to a certain time of day can be fraught. However, if you analyze a few months of data, a few very general patterns emerge.

Bitcoin (CRYPTO:BTC), Ether (CRYPTO:ETH), Binance (CRYPTO:BNB), Solana (CRYPTO:SOL), and Cardano (CRYPTO:ADA) trading activity tends to rise and fall at roughly the same time, which is handy for the sake of comparing windows to buy the cryptos with the highest market capitalizations.

Looking at data in the 90 days prior to Sept. 7, 2022, the very best time of day to purchase these popular cryptocurrencies in the United States generally was in the afternoon. Other coins not considered to be as “serious” also followed similar patterns as Bitcoin and Ether, such as Shiba Inu (CRYPTO:SHIB) and Dogecoin (CRYPTO:DOGE).

Best time of the week to buy cryptocurrency

Based on the same data used to determine the best time of day to buy crypto, the best day of the week to buy crypto seems to be Tuesday, followed closely by Thursday and Saturday.

However, the 2022 crypto winter has been causing steep and random drops in prices that don’t seem to be connected to much other than fears of the market dropping even further, so there are plenty of deviations from this pattern.

Best time of the month to buy cryptocurrency

With crypto, everything is constantly changing, which is a problem if you’re trying to time purchases. For the moment, however, the best time of the month to buy is typically near the end of the month. Values tend to rise in the first 10 days, followed by a price collapse (probably because people are selling after increases) during the second half of the month.

Again, this may vary with some cryptos or smaller altcoins. Based on the coins with the highest capitalization rates, however, the trend seems to be fairly consistent.

3MosSeptember2022CryptoValues

Source: YCharts.

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What is the best move with crypto?

Timing a cryptocurrency buy can be difficult if not treacherous since there are so many elements that go into the price of a coin. Although there are fewer personality-based drivers (such as sex scandals involving CEOs of major companies, for example), there are more lemming-like sell-offs. People have only so much tolerance for risk, and the fear of missing out on selling a crypto holding for a short-term profit is a tempting siren song.

With crypto, as with any kind of investment, your best bet will always be to hold on for the longer term and buy a little bit at a time. Your highest returns will come from this strategy, even though it’s not particularly sexy and doesn’t provide any of that Vegas-like thrill for investors hoping for a quick winner.

Kristi Waterworth has positions in Bitcoin, Ethereum, Shiba Inu, and Solana. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and Solana. The Motley Fool has a disclosure policy

Most traders rely on technical analysis to profit in the financial markets. With so many chart patterns and indicators, it’s easy to get lost in the weeds when developing a trading strategy. A common oversight is looking at a single timeframe for both the trend and specific entry and exit points—but you risk not seeing the forest through the trees.

Let’s take a look at how multi-timeframe trading analysis can help you better identify trends, trading opportunities in the crypto market and also help you determine the best hours to trade bitcoin.

What is Multi-Time Frame Analysis?

Multi-time frame analysis is the process of viewing the same asset under different timeframes. For example, a swing trader might use a daily chart to see the long-term trend and then a 4-hour chart to find specific entry and exit points.

The optimal timeframes for identifying trends and entry points depend on the type of trade and holding period. As a general rule, traders should use a ratio of 1:4 or 1:6, such as a 1-hour chart for entries and a 4-hour chart for spotting the trend.

While it’s possible to use more than two timeframes, the added complexity creates diminishing returns when it comes to realizing tangible benefits.

But how should traders determine the best hours to trade bitcoin? Most traders should stick to two-time frames when starting out and perhaps expand to a maximum of three if they need it.

Example

Suppose that you’re a swing trader that prefers to look for entry or exit points on a 4-hour chart. Rather than using just the 4-hour chart, you might start by looking at the daily chart to get a sense of the trend—after all, ‘the trend is your friend’ in trading!

Multiple Time Frame AnalysisDaily Chart Shows Uptrend – Source: StockCharts

You see that the daily chart shows a bullish uptrend, which means that you may want to maintain a bull bias when looking for 4-hour opportunities. In other words, you might only look for long trades for the day to increase the odds of a successful trade.

In addition to seeing a high-level trend, you may notice an ascending triangle chart pattern on the daily chart and use the trendline price levels as key areas of support and resistance that may not be nearly as obvious on the 4-hour chart.

How To Use Multi-Time Frame Trading?

There are a couple of ways to use multi-timeframe trading analysis for figuring out the best hours for crypto trading.

Many traders simultaneously display two charts in separate windows or monitors. That way, they can quickly reference the long-term trend before entering or exiting short-term positions. The ability to see across multiple time frames is one of the main reasons that professional traders use multiple monitors at their trading stations.

You can also look at technical indicator values across multiple timeframes. For example, the relative strength index on a 1-day chart may be bearish at the same time that the RSI on a 1-minute chart is bullish. You might therefore look at the 1-day RSI value (rather than the entire chart) to determine the direction of your trades on the 1-minute chart.

Multiple Time Frame Trading AnalysisExample of Multiple Time Frames in a Single View – Source: Dell

Some software solutions simplify multiple time frame analysis trading. For example, some technical analysis platforms let traders see trend lines and technical indicators from multiple timelines on the same chart. Python also provides technical analysis tools that you can use to build custom directional indicators leveraging data across multiple timeframes.

Best Hours for Crypto Trading

Beginners frequently focus on a single time frame, overlooking the more strong underlying trend when they’re determining the best hours to trade bitcoin. Alternatively, traders may be following the main trend but overlook the significance of fine-tuning their inputs in a suitable short-term time frame.

Once the fundamental trend has been established, traders can define the intermediary trend with their desired time frame and the short-term trend with a shorter time frame. The following are some examples of how different types of traders analyse the best hours for crypto trading:

Trader Multi- Time Frame Analysis Primary Trend Secondary Trend Long-term position trader

  • Weekly charts
  • Monthy charts
  • Day trader 15-minute chart 60-minute chart Swing trader Weekly chart 60-minute chart

    Considerations For Crypto Traders

    The crypto markets are similar to conventional assets, such as stocks or forex, but there are some considerations that traders should keep in mind.

    Some crypto assets have less liquidity than stocks or forex, which means that some timeframes will not be very useful. For instance, an asset that only trades every few days doesn’t have a very useful 1-minute or 1-hour chart. Traders should keep liquidity in mind when selecting the right crypto assets for their trading style and use MTFA accordingly.

    Crypto assets can be event-driven in some instances, such as when hard forks or algorithm changes take place, which can throw a wrench in any technical analysis. You should always be aware of upcoming event-driven risk factors and potentially stay out of the market if you don’t want to take the added directional risk.

    Best Time Frame for Crypto Trading

    One aggressive short-term trading strategy is day trading. Within a day, you want to acquire and sell cryptocurrencies, taking profits before bedtime. A trading day typically concludes at 4:30 p.m. local time in more established marketplaces like the stock market. However, since the bitcoin market is open every day of the year, you may set your day-trading hours to meet your schedule.

    There is plenty of evidence to imply that cryptocurrency trading activity corresponds with regular market hours in the United States, showing that the majority of cryptocurrency investments transferred from the East to the West.

    Let us take a look at the best timeframe for crypto trading, especially Ethereum.

    Gas costs for transactions on Ethereum fluctuate in price based on network usage. In order to maximize the transaction time for traders with more undersized portfolios, that might thus be a key consideration.

    According to analysts, there are fewer numbers but much bigger transactions around midnight ET and relatively much higher activity at around 1700hrs ET, which was once the most expensive period to transact.

    However, all of the attempts to streamline Ethereum trading have created a conundrum, maybe in an effort to reduce gas costs.

    It appears that people have been attempting to be cunning by making fewer transactions during the busiest times of the day. However, it just made the less busy hours busier and more pricey as a result.

    The Bottom Line

    Multi-time frame analysis trading can help you spot longer-term trends before finding nearer-term entry and exit points. You can use multiple time frame analysis by opening two charts side-by-side or by using indicator values to compute a directional bias for trades. Of course, it’s important to keep in mind the common pitfalls before using MTFA in practice.

    While multiple time frame analysis may be an under-appreciated technical analysis technique, crypto taxes are an under-appreciated risk and opportunity for traders. Crypto taxes are significantly more complex than conventional financial assets and the IRS has begun to crack down on traders that fail to report their capital gains.

    Taxes also present an opportunity for crypto traders. Since crypto assets aren’t subject to the same wash rules as conventional financial assets, there are many more opportunities to harvest tax losses to offset capital gains elsewhere or even ordinary income. The key is finding these opportunities amid the complexities of crypto trading activity.

    If you’re a crypto trader, ZenLedger can help you identify ways to reduce your taxes through tax-loss harvesting. You can also use the platform to ensure that you’re accurately filing taxes with an audit trail in place in case you experience any IRS issues.

    Multi-Time Frame Trading – Best Time-Frame For Crypto Trading FAQs

    1. What is multi-time frame trading?

    Multiple time frame trading is the process of viewing currency pairs under multiple time frames. Generally, the larger time frame is used to establish a longer-term trend, whereas a shorter time frame is used to spot ideal entries into the market.

    2. What is the best time frame for trading?

    Day traders resume day trading in the afternoon. Some traders begin around 1 p.m. EST, while others prefer to wait and resume trading closer to the market close.

    3. How many time frames should you use?

    There is a limit to how many time frames you can study. For most effective trading, you should use at least two, but not more than three-time frames.

    4. How do you use multiple frames in trading?

    The longer the time frame analysis, the more reliable the signals being given. As you cut short the time frames, the charts become more polluted with false moves and noise. You should use a longer time frame to define the primary trend of whatever you are trading.

    5. What time frame do professional traders use?

    Professional traders take about 30 seconds to choose a time frame. Their choice of time frame isn’t based on their trading system or technique—or the market in which they’re trading. Rather it is based on their own trading personality.

    6. How should traders determine the best hours to trade bitcoin?

    The optimal timeframes for identifying trends and entry points depend on the type of trade and holding period. As a general rule, traders should use a ratio of 1:4 or 1:6, such as a 1-hour chart for entries and a 4-hour chart for spotting the trend. While it’s possible to use more than two timeframes, the added complexity creates diminishing returns when it comes to realizing tangible benefits.
    Most traders should stick to two-time frames when starting out and perhaps expand to a maximum of three if they need it.

    ZenLedger easily calculates your crypto taxes and also finds opportunities for you to save money and trade smarter. Get started for free now or learn more about our tax professional prepared plans!

    Written by Jane