Decoding market trends: When is the ideal time to trade Bitcoin?

Global market hours and Bitcoin trading

When we look at traditional stock and bond markets, they typically trade from 8 AM to 5 PM on average. However, this can change depending on the geographical location. On the flip side, the crypto market is open 24/7 and never sleeps. As a result, investors will need to look at the most active global trading hours instead of when the market starts.

And the more interest Bitcoin witnesses from large institutional investors and entities, the more we can see its trading and activity patterns getting closer to those of traditional markets.

Asian Market Hours: Tokyo and Hong Kong are significant players in the Bitcoin market. Trading volumes tend to spike during their business hours, especially in the early hours when these markets open.

European Market Hours: London, being a pivotal global financial hub, often may see a surge in Bitcoin trading activity during its working hours. The overlap between Asian markets closing and European markets opening can be particularly active.

North American Market Hours: New York, a dominant financial center, sees heightened Bitcoin trading during its business hours. The overlap between European markets closing and North American markets opening also marks a period of increased activity

Regardless of the day of the week or time of day, traders can get onto any centralized or decentralized cryptocurrency exchange, connect a wallet, and trade digital currencies at any point in time.

Hours with highest Bitcoin trading volumes and volatility

There are specific parts of the day where the price activity for Bitcoin trading could see a spike or decline. This can be the direct result of market sessions overlapping and low activity on weekends. For example, the first few hours after major markets like Tokyo, London, or New York open can be particularly volatile as traders react to overnight news and adjust their strategies.

Based on an analysis of the historical price data, Friday through Monday represent the best days to buy, since price tends to trend down in a low-volatility environment of the week-ends.

Accordingly, Tuesdays and Wednesdays are the best days to sell. The lowest average daily high price for any day of the week for Bitcoin was on Sundays as well, based on data from August 5, 2023, to August 3, 2023.

The highest level of activity for cryptocurrency trading is from 8:00 AM to 4:00 PM. While the markets are open 24/7, they can be "closed" after these hours in the context that the market movements will not be significant, and there will not be any meaningful news or developments to initiate a price dip or rally. So, for the highest volatility and volume, the aforementioned time frame is seen as optimal.

Major news and events that impact Bitcoin price

There are also major news, events, or developments within the Bitcoin ecosystem or networks that exist on top of it, which can contribute towards an increase in its overall value. Global news and announcements lead to volatile price swings regardless of the hour or day. By understanding what kind of news affects crypto, investors can manage their risk accordingly.

Specifically, Bitcoin could be affected in value and volume if it gets integrated by a big corporation. When Tesla initially communicated a decision to adopt Bitcoin as a payment option, its price dramatically increased.

Regulatory developments (or even hints of potential regulatory changes) regarding cryptocurrencies in major countries often lead to high volatility. For example, China banning Bitcoin trading and mining in 2021 led to a significant dip in price. Rumors surrounding the acceptance of a new Bitcoin exchange-traded fund (ETF) can also affect its value.

Bitcoin mining costs can determine the future outlook and value of the crypto and capital inflows from institutional players, thus effecting the long-term trends.

Global economic events, like financial crises or significant shifts in traditional markets, can influence Bitcoin's appeal as an alternative asset.

Major exchange hack (Mt.Gox) or bankruptcy (FTX) lead to market-wide selloffs.

Risk management and volatility control

Bitcoin is a highly volatile cryptocurrency by its own nature. It can see significant price fluctuations on an hourly, daily, and weekly basis. As a result, picking the most active and volatile hours can increase risk exposure to this volatility.

Through implementing a risk management technique, such as one that utilizes stop-loss orders, careful position-sizing, and avoiding overleveraging, investors can get the most control out of the market.

Each investor and trader must also pay attention to the indicators surrounding volatility assessment, such as Average True Range (ATR) and Bollinger Bands. By utilizing crypto trading bots, all of this can be done automatically, leaving investors with more time to make well-educated decisions.