Perhaps not surprisingly, momentum plays an important role in when to buy bitcoin, but what may be surprising is that buying the cryptocurrency after it has experienced big rallies can be a winning strategy.
“In fact, the best historical strategy would have been to buy bitcoin after its price already had a sharp increase — 20 percent in a single week — and sell just seven days after buying, Tsyvinsky and Liu concluded,” according to CNBC.
Sentiment, including what market participants are saying about bitcoin and other digital currencies online, can also be a solid avenue for timing purchases.
“Tsyvinsky and Liu found the amount of interest and hype around cryptocurrencies, measured by investors searching and posting online, was a significant predictor of price movements,” reports CNBC.
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