The Best Time to Day Trade Cryptos
What are the best times to day trade cryptos? This is a question many beginners ask as they start to make their foray into the market. The cryptocurrency market is the only financial market which is open 24/7. All other markets shut down on Friday by 9 pm UTC and reopen on Sunday at 9 pm UTC. Some markets only trade at specific times during a business day. The 24/7 nature of the cryptocurrency market also means that there are opportunities to day trade on Saturdays and Sundays. Does the fact that the crypto market is always open allow for continuous trading around the clock, or are there the best times to day trade cryptos? This is what this piece will answer.
The Best Time to Day Trade Cryptos: Important Facts
Making money in crypto trading is about catching the volatility in the right direction and at the right moment. Unlike the forex or stock markets where the periods of highest volatility are well defined, the crypto market does not have volatility periods that follow a regular pattern. There will be times when the markets are quiet and other times when they will be volatile. This makes picking out the best times to day trade cryptos trickier.
As a day trader, you are interested in opening and closing positions within the same day. To understand the best time to day trade cryptos, you need to understand some crucial facts that dictate the periods of volatility in the market. Some of these pointers are as follows:
Market News Affecting Correlated Assets
While the cryptocurrency market does not have an economic news calendar, the market sometimes responds to some of the news found on that calendar. Some of the news on the forex news calendar impacts Bitcoin and some of its correlated altcoins. The markets are now in a period governed by interest rate hikes across the world. Cryptos are risky assets by nature. When central banks raise interest rates or indicate they will raise rates in the future, it drives institutional money away from risky assets towards safer assets such as Treasury bills and other fixed-income derivatives. The yields from such fixed-income instruments are tied directly to the national interest rates, especially that of the US. It is a known fact that when the Federal Reserve raises rates, it boosts the value of the US Dollar. Tether (USDT) and, to a lesser degree, other stablecoins pegged to the US Dollar at parity are also impacted positively when the Fed raises rates. This causes traders to ditch BTC and other correlated cryptos paired to the USDT, causing the value of these cryptos to fall.
Now how does market news come in here? Some events on the economic news calendar, such as the Fed's interest rate decision, the FOMC minutes, and inflation data (used by traders to determine interest rate expectations), will cause volatility on the US Dollar and cryptos. Typically a news release will have an immediate impact that lasts for about 30 minutes before the volatility becomes less drastic. So you can expect these periods will be the best time to day trade cryptos.
2) Latest News Releases
Twitter represents the best source of the latest crypto news releases. Here, you can get both facts and fiction. As was seen with Litecoin in 2021, a rumour that turned out to be false engineered a short-term bull run on the LTC/USD pair, before the project's team came out to debunk the rumour that engineered the buying demand.
News from China is also another source of crypto volatility. These are usually more negative than positive. Twitter is a good source of information regarding any moves made by China against cryptos. This news usually produces volatility in the crypto market. Even though the first tweets about such situations are seen early in the London session, they usually exert a market effect in the middle of the trading day in Europe, close to when the New York session is about to open for business.
3) IDO/IEO Offer Using a Listed Crypto As Payment Channel
Before the crypto market crash in 2021, several Initial Exchange Offers of projects to be listed on the Metaverse were hitting the market. Such offers require KYC-verified users to use Bitcoin and Ethereum to buy units of the native token being offered. Some of these offers used unconventional cryptos found in very few exchanges as the currency for purchasing subscriptions. This created demand for such tokens with attendant changes in price.
Monkeyball was one such project. To participate in its offer, users had to buy the $STARS token at Raydium, Symmetry and now defunct FTX. This created a lot of volatility in the price of $STARS, creating opportunities for day traders. Now while these sorts of opportunities do not exist currently, there is a chance that in future, they could emerge once more. This option is worth considering at that time.
4) The Weekend Selloff
If you have closely followed the crypto market over the last two years, you will notice that a lot of selling and pullbacks in Bitcoin and other associated altcoins tend to occur on Sundays. Several factors have been blamed, from after-hours price swings to low-volume trades and margin position liquidations. Stephen McKeon, a University Professor of Finance and partner at Collab+Currency, affirms that this phenomenon has been around for several years.
Due to the relatively faster price moves in cryptocurrencies, especially those recently listed on exchanges, margin trading assumes a new dimension of risk to the trader. When trades are in a loss position and trigger a margin call, most traders cannot cover these calls during the weekend when banks are shut, and the exchange liquidates these positions. When such margin stop outs are triggered on a large scale, it sets off market panic, and the affected crypto may find itself on the back of a significant selloff. These selloffs are usually shortlived, as the opening of the Asian session for the new week sees some bargain hunting which eventually shores up the prices of the affected cryptos. The short-term nature of the weekend selloff makes for an excellent opportunity for day traders, making this day one of the best times to day trade cryptos.
Best Times to Day Trade Cryptos
So what are the best times to day trade cryptos? From the information in this article, the best times are as follows:
If you are looking for leveraged selling opportunities, opportunities may be seen on Sundays between 3 pm UTC and 8 pm UTC. Watch to see if long bearish candles have started to form on the lower time frames (15 minutes, 1 hour). These are usually indications that volatility is increasing.
Watch for any news from China regarding cryptos. These hit the markets during the London session's business hours but exert some profound market impact when the New York session traders join the fray.
As a general rule, the crypto market sees two bursts of activity. This is during the Asian session (due to the predominance of exchanges) and during the New York session (when a lot of institutional money comes into the mix).
You can research the market for one week to see whether the times stated here match the market reality.