Stocks and crypto have taken quite a hit over the last year or more as the Federal Reserve raised interest rates, Russia invaded Ukraine and drove commodity prices higher, inflation hit its worst in four decades and everyone started to worry about a severe recession due to the Fed overshooting as it attempts to tame inflation. Now that the Federal Reserve is easing up on its interest rate increases (0.25% in February 2023) markets are excited. Is this the time to jump in and buy stocks or cryptocurrencies? In fact, is there a best time to buy Bitcoin?
When to Buy and When to Sell Cryptocurrencies
With the value of hindsight, the obvious best time to buy Bitcoin was back in 2008, 2009, or 2010 when the tokens were worth pennies. Even in 2013 when Bitcoin gained parity with the dollar it was, in hindsight, a great time to buy. The best times to sell were obviously at the peaks of December 15, 2017 for $19,000, March 12, 2021 for $61,000, November 12, 2021, for $64,000 or even April 1, 2022 for $45,800. The problem for any investor is to identify when an asset like property, a stock, or a crypto token is ready to gain value or about to lose it. For those who trade crypto, this is a short term process. Identify a trough, buy, spot the peak, and get out. For long term investors it has truly become a matter of hold on for dear life as crypto winter has drained two-thirds the dollar value from Bitcoin and other tokens or at least the ones whose crypto exchanges have not collapsed. The thing is, how do you spot when the market is going to turn around. When is the best time to buy?
Best Time to Buy Is When a Recession Is Announced
A useful bit of information for those who have not already spotted the correlation is that Bitcoin and the Nasdaq stock market have been tracking up and down very consistently for at least a couple of years. In fact, we just asked the question in an article if Bitcoin will follow Nasdaq back up when the time is right. Then the question is when the Nasdaq is going to head up. The National Board of Economic Research announces when they have determined that the country is in a recession. The problem is that identifying a recession involves looking at economic data going back a couple of months or more. Nonfarm payroll, industrial output, and retail sales, and the gross domestic product go into these calculations, all of which are for the preceding months. As a rule the NBER tends to proclaim a recession at exactly the time that the recession has bottomed out. This is exactly the best time to buy stocks. And since Bitcoin tracks along with the Nasdaq, it may well be the ideal time to buy Bitcoin.
So, When Will the Nasdaq Recover?
On February 1, 2023, at two in the afternoon the Fed Chair announced a 0.25% rate increase and discussed how the Fed will continue to raise rates at a slower pace than before in order to bring inflation down to the 2% range before they let up on their rate increases. As soon as Powell made his announcement both Nasdaq and Bitcoin jumped up, down, and then up by a couple of percent. Meanwhile, tech companies that comprise the Nasdaq are laying people off and digging in to survive the recession. While wishful thinking will drive stocks and Bitcoin up from time to time, we expect that the real surge in value will come as the recession bottoms out which, coincidentally, is about the time that experts announce that, for sure, we are now in a recession which will likely be in a few months.
Is There a Best Time to Buy Bitcoin? – SlideShare Version