Every investor wants to find the perfect investment. But, this year (2022) it has become difficult to find cryptocurrencies that can see an exponential increase in value like Bitcoin, Ethereum or some AltCoins and ShitCoins did in 2020 and 2021.
However, it is clear that some blockchain projects can make a difference and represent real growth potential. Therefore, it is important to know how to spot a signal to buy a cryptocurrency at the right time. Timing is very important in the stock market.
We will look at the different market elements that can constitute a buy signal.
The cryptocurrency market
The crypto market as a whole tends more and more to follow the main stock indices such as the Dow Jones, the Nasdaq or even the CAC40.
This must be taken into account because in a bear market, cryptos like Bitcoin, Ethereum,… and even small cryptos will have a little more difficulty to go back up.
If you are a long-term investor, you can take advantage of dips to buy cheap (low cryptocurrency price) before the market recovers.
When the market is bullish, you have to watch the cryptocurrencies that go back up. Those that interest people as buyers (traders and investors). A general rise in stock indices is a good buy signal, although you have to be careful with the pump and speculation so as not to get trapped in a crypto asset.
The crypto news
Although the evolution of the prices of cryptocurrencies is increasingly correlated with the stock markets, the current situation of the cryptocurrency market is very important. Types of news that can boost the cryptocurrency market or a particular cryptocurrency:
- a powerful investor announces that he invested in Bitcoin, Ethereum, … or even a specific lesser-known crypto.
- a technology linked to a developing cryptography and that is adopted by companies (in the form of an association, for example).
Be careful, however, with some news that may be fake, in the cryptocurrency market it is not uncommon to have news designed only to pump; you have to pay attention to some stock market community and some influencers. In the event of a reversal or sharp drop in the price of the crypto, you should be ready to sell your asset if the surge was based solely on news that has not been validated.
Conversely, validated good news can boost a headline over time.
the last word
Once again, I repeat myself saying that the most important thing is to manage the portfolio well before trying to predict the future. Anything can happen on the stock market and good portfolio management that foresees bad scenarios will protect you (after all, your capital). Furthermore, cryptocurrencies are hyperspeculative assets. Therefore, it is necessary to be more rigorous in management than with quieter assets (equities, ETFs, indices, etc.).
Now, certain signals, whether technical or based on the fundamentals, can give significant chances of success. This is what we have seen in this document. Cryptocurrencies have great long-term investment potential. You have to know how to order, arbitrate and manage your losses in certain files.
Whether you are a trader or an investor, you must put maximum opportunity on your side when making a purchase in the stock market. Combining a good chance of success with good portfolio management can pay off in the long run.