Bitcoin is currently in a bullish trend. In fact, throughout 2024, it was reaching new maximum prices. First, in March — $73,000. Since early November, it has reached $100,000. In between these peaks, the price of BTC drops shortly. And, when the bullish trend eventually concludes, there will likely be a considerable price correction. The hard part is deciding when to exchange BTC to USD and avoid losing money to price drops.
Metrics That Matter
To gauge the market, investors need to analyze different key metrics. They can inform about current market sentiment or specific value levels. Market cap is the most evaluated metric after the price. It represents the size of the market for any given asset, multiplying its price by its circulating supply. Trading volume, on the other hand, can provide a sense of the coin’s activity. It represents the amount of coins traded in a day.
Investors’ sentiment also plays a big role in crypto markets. To measure that, we have the Fear and Greed Index. It represents whether investors are compulsively buying more coins or are wary of price drops. A high greed index, while positive, can signal an incoming drop. And a high fear value could represent an opportunity to buy. A good strategy is to evaluate not only the metrics but also how investors are likely to react to them.
3 Steps Before Cashing Out Your Bitcoins
Yes, price swings can’t be predicted, but that doesn’t mean there aren’t signs that indicate them.
1. Analyze Market Trends and Indicators
To make the exchange at the right time, analyze the metrics described above. External factors that influence the price of Bitcoin should be kept in mind as well. For example, Bitcoin fell around 10% on December 19th, after the Federal Reserve of the US announced its third rate cut and projected two for 2025.
2. Assess Trading Volume and Liquidity
Trading volume is a great indicator of market activity, along with liquidity. The former represents the amount of tokens in a day, while liquidity reflects how easy it would be to exchange the coin. Both are interconnected, as a high trading volume means that many investors are exchanging the asset, providing liquidity. Bitcoin is one of the most liquid assets in the crypto market. It’s constantly being bought and sold, and its daily volume is the second-largest, surpassed only by USDT.
3. Reduce Risks
Crypto investments are inherently risky, but that doesn’t mean traders should be careless. Bitcoin moves in cycles, and a seasoned investor should check the pulse of the market and strategize accordingly. Analyzing and contrasting different metrics can help with that. For example, a high trading volume, paired with a high greed index, should indicate investors to be wary. That could signal a good moment to make an exchange. Remember that selling BTC at the right time will maximize the profits while avoiding value losses during price drops.
Top 3 Mistakes to Avoid When Exchanging BTC for USD
There are other indicators created to make predictions on the future of BTC, based on the basic metrics. Top Cap, for example, takes data from market capitalization and price to make its forecasts. It has proven useful in predicting the maximum price during bullish trends. CVDD, on the other hand, is utilized for major lows prediction. In bearish times, it’s wise to buy at the lowest dip. CVDD takes data from UTXOs (unspent transaction output). A tool called Terminal Price also takes on-chain data, like CVDD, but this time to predict the highs of bullish cycles. It’s similar to Top Cap, but using on-chain data instead of market data.
These tools can be really useful to shield your strategy, but still, it’s not recommended to rely solely on them.
1. Ignoring Market Timing and Volatility
Price swings in crypto are larger than in traditional assets. Bitcoin’s volatility has waned a bit, and it’s likely to continue slowing down as the market grows larger. Despite that, it can still affect investments. If traders miss the appropriate timing to make the exchange, a sudden price drop can wipe out part of the portfolio. Trading requires full attention to maximize gains, but also to minimize losses.
2. Using Platforms Without Proper Security Measures
Faulty exchanges are also one of the biggest risks while trading. Since the market is not fully regulated, there are plenty of platforms that are either careless about their security infrastructure or outright scams. Before depositing money in a new exchange, check for SSL certificates, the platform’s history and reviews, and regulatory compliance. It’s also advised to implement 2FA and use secure passwords.
3. Failing to Account for Exchange Fees and Hidden Costs
This isn’t necessarily a practice of scam platforms, but it’s still an issue for customers. All exchanges charge fees, as that’s how they cover their operations. It’s usually a percentage of the trade, as well as transfer or withdrawal fees. However, some exchanges also charge other fees that aren’t explicitly stated. After finding a secure platform, investors should thoroughly check for all the fees involved to avoid overspending.
What to Expect from BTC to USD in the Future
The price of BTC is currently down around 10%, after the Fed rates announcement. However, the metrics mentioned indicate that investors are still confident about the future outcome. The bullish market could still continue for a couple of weeks, or even months, as new developments take place in the industry. Artificial Intelligence is also being used to analyze market data and social media sentiment more accurately, and that can give us better forecasts. This way, investors can build better strategies for their portfolios.
