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When is the Best Time to Buy Bitcoin: A Detailed Guide

 The best time to buy Bitcoin (BTC) is when a prospective bitcoin buyer has some extra money they would like to save.

That could be some extra on a one-time basis, or it could be extra regular income that you would like to save. The key is that it is truly extra money that you don’t need, can live without, don’t plan on spending, and wouldn’t really notice it if it were gone.

Best Time to Buy Bitcoin

Different investors have different reasons for saving their money in various investment instruments.

While Bitcoin is still a new, high-tech sector, a digital enterprise that has created a new class of investables over the past decade, in 2022 its unique value proposition has been understood by the mainstream. Its accelerating development and adoption by most of its addressable market seem to be only a matter of time.

Why Has Bitcoin Been So Popular Over The Last Decade?

Bitcoin has been so popular over the past decade because of the features and benefits it offers as a cash savings and payments system, essentially, as a bank.

What makes the king cryptocurrency so unique, however, is that it is a bank that operates from peer to peer (P2P), over a distributed network, using an open-source software app.

Rather than a private server storing your password information and validating your orders for money you have deposited, as at a traditional bank, Bitcoin secures your bitcoin addresses with distributed cryptography.

The implementation is lightweight and powerful for the amount of capitalized transactions it has hosted and secured. It has a low surface area for exposure to risks of vulnerabilities to exploits. 

It operates from within the C Languages, is very stable and reliable, and hasn’t failed to place another block on average every ten minutes for over a decade on the Internet.

When Is The Best Time To Buy Bitcoin?

The best time to buy bitcoin to maximize profitability is when the bitcoin price is at or near a cyclical low. That will maximize profits the entire way up to the next cyclical peak price.

This was essentially the investing strategy of Berkshire Hathaway’s Warren Buffett. He would find businesses that had strong long-term value-creating prospects. His preference was for ones already undervalued by the market. When they were especially cheap, he would acquire them.

Bitcoin buyers who think the cryptocurrency has strong prospects for creating value over the long term are undervalued by the market, and still in its earliest stages of development and adoption, only have to wait for those bargain prices to take a swing to follow Buffett’s winning formula.

Stock to Flow Model of Bitcoin Fundamental Analysis

One popular method of analysis to determine when is the best time to buy bitcoin is the stock-to-flow model. This is looking at how much bitcoin volume is changing hands on exchanges (stock) and dividing it by the amount of new bitcoin created by miners over that period. That’s all.

The stock-to-flow model can help crypto investors determine when is the best time to buy bitcoin. That is because its measures how much bitcoin is being used as a medium of exchange against the increase in the supply of bitcoin, which relatively decreases the value of other bitcoin, ceteris paribus (all other things being equal).

So using this method, an investor is taking a fundamental approach to analysis. If bitcoin is being used more as a medium of exchange, the reasoning behind this approach goes, against the same supply of new bitcoin, then it’s more valuable and that should increase its price ceteris paribus. If its price does not increase, the market may be late to catch on and there could be an opportunity to buy at value.

Bitcoin Rainbow Charts 2022 Backtested Through 2012

Bitcoin Rainbow Charts are another analyst recommendation tool to help prospective buyers to decide when is the best time to buy bitcoin.

The chart is not investment advice. What it is though, is an accurate record of the historical bitcoin price, with a band overlaying it in the colors of the rainbow.

The band is calibrated so that most of the time, along the historical range from 2012 through 2022, following its recommendations would have resulted in profitable trades.

The Bitcoin Rainbow Charts have been famous on the cryptosphere since June of 2022, when the bitcoin price crossed over the threshold into Violet, the most enthusiastic Buy recommendation on the Bitcoin Rainbow Charts, “Basically A Fire Sale.”

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