The Perfect Time to Buy Crypto
Robert Ross|February 13, 2024
Ask any serious crypto investor how they know when it’s time to buy Bitcoin… and you’ll get a variety of answers.
Every investor has their own method. Some look at the Bitcoin network’s fundamentals like transaction volume or the number of new Bitcoin wallet addresses.
Other people lean on technical analysis, using patterns and trends on Bitcoin’s chart to predict where the cryptocurrency’s price is headed.
While I use both fundamental and technical analysis to determine when to buy, there’s another factor in my research.
And you should keep this tool in your toolkit as well… as it’s showing now is a perfect time to buy.
2022 Was a Rough One
2022 was a tough time to be a crypto investor.
At the start of the year, Bitcoin had fallen as much as 76% from its November 2021 highs of $66,000.
The main culprit for this pullback was a general “risk off” investing environment.
Unlike the insane bull run from 2020 and 2021 which was fueled by low interest rates, increased institutional adoption and retail investors plugging their stimulus checks into the market…
2022 was the exact opposite. Interest rates were rising at their fastest pace in history, institutional investors were losing money hand over fist and high inflation weighed on consumer spending.
And then in November 2022, crypto investors got the surprise of their lives when FTX went bankrupt.
But while the collapse of FTX was a watershed moment in crypto, it was also the sentiment low in the crypto bear market.
My Secret Ingredient
When I say “sentiment low,” it means that the investor outlook for the crypto market was at its lowest point.
Crypto had already been in a deep bear market prior to the FTX collapse.
But when the world’s second largest exchange went bust, people thought the crypto market might be dead for good.
When sentiment is at its lowest, investors often sell their assets – in this case crypto – indiscriminately. They have lost so much money that they can’t bear to even look at their accounts. To stop the “pain” they will sell regardless of price.
In the investing world, this stage of the market cycle is known as “capitulation.”
During a “capitulation event,” it’s painful to invest. It seems there is no end in sight, and all you can think of is wanting to get your money back.
But this is the best time to buy. Whether it’s stocks, bonds or crypto, you will always find the best deals near the sentiment low for any asset class.
That’s why it’s no surprise that the FTX bankruptcy was the sentiment low – and bottom – for the Bitcoin bear market.
A Few Tricks of the Trade
I have a few indicators I watch closely to gauge investor sentiment in the crypto market and – by proxy – measure where we are in the market cycle.
The first, as I’ve discussed here, is the net unrealized profit/loss (NUPL) indicator. This is a measure of the number of bitcoin currently in profit.
And in previous cycles, it peaked when 75% of recently purchased bitcoin were in profit (i.e. people were feeling very rich)…
It bottomed when 0% of recently purchased bitcoin were in profit (i.e. people were feeling very poor).
Next, I keep close attention to Google searches.
When tons of people are searching for Bitcoin on Google, it’s usually a good sign we’re near a market peak. For instance, in the previous cycle bitcoin peaked in mid-2021 and bottomed in November 2022.
This nearly perfectly coincides with Google searches for Bitcoin…
The flip side is true too, as markets typically bottom when searches for “Bitcoin is dead” or “crypto is dead” grow…
So is now a good time to buy bitcoin?
My Outlook for Bitcoin
I’ve invested in Bitcoin since 2017.
I wrote about my experience investing in the crypto space in my 2022 book A Beginner’s Guide to High-Risk, High-Reward Investing.
And I say we’re currently in the 4th inning of this crypto bull run…
Does that mean there won’t be short-term pullbacks? Of course there will be… especially after the wild run we had in 2023.
But even after Bitcoin’s latest run, I am not seeing any signs the public is paying attention. Google searches for “how to buy Bitcoin” are near a five-year low.
That means that despite Bitcoin’s big run up last year… we’re nowhere near the top.
So if you missed out on the huge gains in 2023… hold on to your hat.
I’ve just released brand-new research that shows why the crypto bull runs we’ve seen in the past will pale in comparison to what’s coming…. where investors should be looking (hint… Bitcoin is just the start!)… and the specific catalyst that will kick things off.
The future for bitcoin and crypto look bright.
Robert Ross
Robert Ross’s unique style of clear and direct stock research helped him build a massive following in the investment research industry, starting his career at investment research company Mauldin Economics and quickly rising through the ranks to become one of the youngest chief analysts in the industry. Today, over a million investors turn to Ross every month for his take on investing, economics, and personal finance. He now shares his unique insights in Total Wealth and Manward Money Report.