Should I invest in Bitcoin 2019?
As 2017 was a spectacular success for the most popular cryptocurrency - Bitcoin. It's price from the bottom to the peak increased by over 10 times, making cryptocurrencies the best investment of the decade. Many people heard about Bitcoin for the first time and bought it when it's price started to rise over $10000 in December 2017.
Right before Christmas, this good trend ended and was replaced by the declining trend, also known as the "bear market". From almost $20000, the price of BTC went down by almost 70% at the end of the year.
As a result, many those who bought the Bitcoin at the peak price in most cases sold it in 2018 with panic at a much lower price. Some of them even say "cryptocurrencies are a scam".
What does “buy low sell high” mean?
These people became victims of their own ignorance. Fuelled by nothing but a pure greed they ignored a fundamental rule of investing: buy low, sell high. This rule is applicable to all the methods of investing. As it can be expected, this approach stands for a very simple rule. In order to make profits when investing, you purchase Bitcoin (here is the article how to do it on our website), you should buy it when the price on the market is low (best effects are when the market price is deemed as under the real value). Next, you keep it as the price is rising and sell it with the profit when the price is much higher.
This is the approach many users of linkkoin cryptocurrency exchange apply. We always have many purchase orders, when the cryptocurrency prices are going down significantly over a short period of time.
How do you know when to buy cryptocurrency?
If you take a look on charts, it is easy to find the “lows” and “highs” from the past. Some could say that with the cryptocurrency volatility it is even easier. But the point is to determine whether AT THIS VERY MOMENT we have a good moment to buy Bitcoin? In one of the previous articles (how to profit from Bitcoin), we already mentioned methods.
One of the ways is to use fundamental analysis – checking the available news. Some news (like information about the BCH hard fork), can have a huge impact on the Bitcoin price.
As well, often going against the crowd can mean buying low and selling high. If you observe panic on the market, with recession/big downtrends, if you are patient enough to hold, this could be the right moment to buy. This is one of the elements of success of HODLers. In another way round – when you see greed (like it was in December 2017 until 20th) due to the huge gains in the price of BTC, this could be the right moment to simply sell.
What is regarded as more effective, is to use technical analysis. If you do not know anything about it, there are some websites like babypips, where you can learn the techniques of trading. This is important because even if cryptocurrencies are easier to some scope to use technical analysis, it is always better to use one of the useful and proven tools.
Most commonly known and used are moving averages. They give you a chance to check the strength of a trend and it's possible direction. If you apply several moving averages (like most common 50 and 200 days, but with cryptocurrencies, shorter ones may be very useful, due to the volatility of Bitcoin) on the same time you can often determine, when the change of trend is coming. This requires the moving averages to cross each other. If the shorter period moving averages line one goes over the longer one, this usually means that it is a good time to buy. If longer period one goes over the shorter period time, this means it can be the right time to sell.
Are these methods 100% effective?
To be honest, no method can guarantee you success in 100% cases. There can be some unexpected events. Even such tycoons as Warren Buffet make some mistakes. As well, depending from the timeframe you trade (if you want to invest in Bitcoin as a long-term investment in scale of months or even years, or maybe for short-term – matter of days and even one day), you may need to adjust them (like changing moving averages time) to better meet your needs. What can be recommended is that if you want to learn how to buy low and sell high is simply to learn by practice. Invest in the beginning with small amounts in BTC. Then, once you gain confidence through positive results, invest higher amounts.
Should I invest in Bitcoin in 2019?
If you can locate the right lows and highs (there are many of them, including “higher lows” or “lower highs”) switching from a perspective of a day to the perspective of months or years) you can invest in Bitcoin no matter of current trends. In such case 2019 can make you as profitable as hodlers became in 2017.