Andrew Kang, co-founder of venture capital firm Mechanism Capital, spoke about the risks of early cryptocurrency purchases during market downturns and named the optimal time for investing in digital assets.

According to Andrew Kang, the bearish trend in the crypto market often misleads investors. Corrections caused by major structural changes in the market are usually delayed and can be more severe than initially expected. Therefore, investors can suffer significant losses if they rush to buy crypto assets.

“The most common mistake in the crypto market is buying too early when the trend is changing from top to bottom. It is better not to buy when only a few people are bearish and Bitcoin is only 10% down from its high. In such scenarios, there is not enough selling pressure to push prices down,” Kang wrote on social media.

He added that it is more expedient to buy cryptocurrency during more serious declines, when the market has completely gotten rid of weak participants who doubted the viability of cryptocurrencies. The head of Mechanism Capital is sure that the best time to buy is when the market mood is falling, and most traders believe that cryptocurrency is gone forever. At this point, the market is in a state of oversold, and prices have reached a minimum level. Then a more favorable risk-reward ratio opens up for investors, the expert emphasized.

The founder of Mechanism Capital noted that more than 98% of altcoins have reached the peak of their cycle. According to his forecast, only a small portion of them will reach new highs in the fourth quarter of 2024 or the first quarter of 2025.

Kang recently suggested that after the launch of spot Ethereum exchange-traded funds (ETFs) in the US, the ETH price could fall to $2,400, as institutional investors are less interested in the cryptocurrency than in Bitcoin.