How to Spot a Crypto Entry Point

The greatest advice that can be given to prospective crypto traders is to buy low and sell high. However, there is less direct advice on how, exactly, this can be done. The cryptocurrency market can be incredibly volatile, meaning that all cryptocurrencies (except for stablecoins) tend to dramatically rise and fall in value over time. 

In this article, we’ll explore what to look out for when choosing a crypto entry point so that you, as the investor, are in the best position to make the highest profits. 

Key Takeaways

• Crypto Preslaes can be an effective entry point.
• How Keeping up to date with crypto trends can be an effective entry point.
• The effectiveness of tracking crypto price movements to spot entry points.
• The use of Bollinger bands to identify a crypto entry point.

Crypto Presales

Crypto presales can be an extremely successful crypto entry point if used effectively. This opportunity can be seized when companies presale crypto to a select number of people who have signed up. Usually, digital assets in crypto presales will be sold at a significantly discounted price compared to the amount they will sell for at launch. Additionally, popular upcoming cryptocurrency has a high growth potential, especially if the crypto has a specific use or is tailored to a specific audience. Investing during a presale enables investors to profit off of the success of the crypto as it gains popularity as they will have invested when the price was low (during the presale) and can sell when the price is high (assuming the asset gains traction after launch.)

Despite this, there are also a considerable number of risks associated with crypto presales. Just as the asset could surge in value after launch, it could also just as easily crash. Those considering investing in crypto presales should ensure they do thorough research before making their final decision. 

Trends

The volatility of cryptocurrency is powered by trends. These trends come in countless forms, such as the integration of new technology into cryptocurrency, social media, and regulatory changes. Keeping up with these trends and reacting as and when they occur is an excellent way to decide where your crypto entry point should be. Not only will this enable you to purchase low and sell high, but it will also aid with diversifying your digital assets. Doing so will increase your chances of profiting from the volatility of cryptocurrency by ensuring you ‘don’t place all your eggs in one basket’ and so can spread out potential rewards and risks.

One way of ensuring the success of a trend is through something called the Moving Average Convergence Divergence Indicator (MACD). This trend-following indicator can inform investors if a crypto asset is in an upward, downward, or stationary trajectory. It consists of two lines, a signal line and the MACD line. If the MACD line rises above the signal line, this tells investors that the cryptocurrency is on an upward trajectory and that now might be a good time to buy. On the other hand, if the MACD line is below the signal line, then this is a good signal to the investor that the cryptocurrency is on a downward trajectory and that now may be a good time to sell.

Price Movement

Another effective way of spotting a crypto entry point is through tracking the price movements of various crypto assets. The price movement refers to whether or not a particular cryptocurrency is currently overbought, oversold, or trending normally. If an asset is overbought then individuals shouldn’t invest at this time as the currency may have surged too quickly in value and may be about to experience a significant drop. Likewise, if a cryptocurrency is oversold, then it may have fallen too quickly and could be due to make a significant comeback.

Many crypto investors use something called a momentum Indicator, or relative strength index (RSI) to track the price movements of various digital assets. The RSI value ranges from 0 to 100. If a cryptocurrency scores below thirty, then this is a sign that it is currently oversold, whereas a score above 70 suggests that the asset may be overbought. Though this is an effective way of spotting a crypto entry point, the volatility of the crypto market cannot be predicted with one hundred percent accuracy, and solely relying on the RSI score is not always going to be effective.

Use a Bollinger Band

Many crypto investors use a Bollinger band to help them identify crypto entry points. These bands are used to identify high and low volatility of crypto assets, therefore providing users with potential entry and exit points. Understanding these bands is a key skill that any investor should learn, as it will allow you to effectively profit from the volatility of cryptocurrency and identify the best crypto entry points.

A Bollinger band consists of three separate components: a middle band (a simple moving average), the upper band, and the lower band. The distance between the upper and lower bands depends on the volatility of a particular cryptocurrency, so being able to read these bands is an excellent way to understand and benefit from the volatility of digital assets. 

Frequently Asked Questions 

When is the best time to enter the crypto market?

The best time to enter the crypto market depends on several different factors, including market trends, technical analysis indicators, and the nature of the assets themselves. You should invest in an asset when it is undervalued, and when the indicators covered in this article suggest that doing so will provide you with favorable results.

How can I tell if a crypto asset is undervalued?

Using an RSI (Relative Strength Index) is an effective way to determine if a digital asset is oversold and could be undervalued. If the RSI score of that asset is under thirty, then this suggests that the asset is oversold, meaning that now might be a good time to invest.

Is it risky to enter the crypto market during a presale?

Yes, although engaging with a crypto presale has its benefits, it also comes with additional risks. These coins have not yet reached the market so it is impossible to fully predict how they will perform once released to the public. They could surge in value, but they could also crash immediately. This is why research is essential and why you must never invest in any form of cryptocurrency beyond your means.