Should I buy the Bitcoin dip?

1 yr
LeoFinance
4 Min Read
737 words

Should I buy the Bitcoin dip?




Buying the Bitcoin dip by dollar cost averaging your position is a great long-term strategy.

Do you believe in the decentralised future of which Bitcoin is the centrepiece?

If you answered yes, then you should always be buying any dip that you’re presented with and dollar cost averaging into your investment.

As a long term investor who ultimately sees Bitcoin as a dominant asset class one day, dollar cost averaging your position by buying the dip is an extremely savvy investing strategy.

You believe that the price of Bitcoin is going to eventually go up, so should use each Bitcoin dip as a chance to lower your average investment price.

Is buying the Bitcoin dip a good strategy?

As we’ve already gone over above, buying the Bitcoin dip is a good strategy if you believe that its price will significantly rise over the long term.

Just like the name suggests, a buy the dip investment strategy entails lowering your average investment price after an asset suddenly drops in value.

It’s this price drop that is referred to in investment circles as the dip.

The idea is that just as it always does, you will come out ahead after the price of Bitcoin inherently recovers and makes new highs.

Investors who implement a buying the dip strategy worry less about timing the market and simply continue to accumulate on dips.

If you go back anywhere in time on the chart, you’ll see that any strategy that involved buying the Bitcoin dip and holding long term has been extremely profitable.

While for legal reasons it must be said that past performance is never an indication of future gains, the charts say otherwise.

Transferring wealth from dumb to smart money

You could argue that Bitcoin’s recent dip, or what the mainstream media are even calling a Bitcoin crash (lol), is purely a transfer of wealth between what’s known as dumb and smart money.

Although crypto seems like all fun and games on the surface, it's still dominated by the same institutions that exist solely to transfer your money to them.

The smart money uses its size and influence to manipulate prices down to areas where they can find the maximum amount of liquidity.

In most cases, this liquidity is simply retail investors or mums and dads who have bought Bitcoin, read the doomsday predictions in the local paper and then panic sell.

That’s right, liquidity is literally the pain of inexperienced Bitcoin investors.

Smart money such as institutional buyers, are more than happy to scoop up the liquidity that these panic sellers provide, completing the transfer of wealth from dumb to smart money.

The technicals behind this Bitcoin dip

Some basic technical analysis backs up our opinion that buying the Bitcoin dip may be a good idea in the short term as well.

Take a look at the current Bitcoin daily chart below.

BTC/USD Daily:
The Bitcoin dip on today's BTC/USD daily chart

I’m a support/resistance trader who focuses on how price reacts around major price levels on the higher time frame charts.

While you can see the dip in question is pretty obvious, you can also see that price is clearly trading within a clear price range between 30 and 40K.

With price currently at the 30K support zone acting as the bottom of our range, it’s healthy to see buyers stepping in and soaking up that sweet liquidity we talked about above.

Taking a long term investment approach, the technicals of Bitcoin actually look extremely healthy.

We all understand that a vertical price rise is unsustainable and this 50% pullback into previous resistance turned support looks ripe for a base to form.

Final thoughts on buying the Bitcoin dip

If you believe that the price of Bitcoin is going to eventually go up over the long term, you should use each Bitcoin dip as a chance to lower your average investment price.

To learn why BItcoin is a good long term investment, check out our always evolving guide to Bitcoin.

BTMFD.

Best of probabilities to you.




Direct from the desk of Dane Williams.

Why not leave a comment below that explains why you’re buying the Bitcoin dip? All comments that add something to the discussion will be upvoted.

This daily market analysis blog is exclusive to leofinance.io.

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I do believe BTC will be higher but do you expect any damage to the charts if BTC does close under 30k? I think we probably still have at least a week before it does make a decision though.

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1

If Bitcoin closes below the 30K range, then yes it opens itself up to further falls.

But support is support until it's not and right now the bottom of that range is holding strong.

As we've seen with Michael Saylor recently continuing to buy the Bitcoin dip, there's certainly no shortage of demand from institutional players.

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0

Where is dip? 30K ?

If you buy bitcoin from 30K, I may sell it from 12K. Wait for 12K to buy...

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1

Where is dip? 30K ?

Well that's the 64,000 question, isn't it! ;)

How deep will Bitcoin dip?

The point however is that if you're a long term investor, dollar cost averaging as Bitcoin dips, is a great strategy.

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1

NO
Watch this

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1

HA, how good is this video!

(I've voted it to the top of the comments section because it's so good that it should be a part of the article itself.

"The moral of the story is don't buy Bitcoin... because you know it's going to crash again."

So good.


Always buy the Bitcoin dip

In case anyone didn't watch the video, it's obviously a piss-take.

He goes through every parabolic Bitcoin rally and shows that each time price quickly rises, we get a 'crash' of at least 50%.

But the thing is that each time it 'crashes', the price of Bitcoin inevitably has already made a new all time high.

So if history is anything to go by, this shows once again that if you're a long term investor, you should always buy the Bitcoin dip.

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1

I find that increasing your bitcoin is a good plan for the long term. I have mine in long term storage gathering intrest and adding gradually.

We will see in the long run but i hope it will go up soon

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1

Interesting to hear that you have your Bitcoin stored where you can earn interest.

Where abouts do you have it stored?

Just always keep in mind the old saying of not your keys, not your crypto.

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1

Fair saying and celsius, just seems to be offer best interest for bitcoin and Ethereum

0

Dumb money to smart money will always win.

While I was reading your post i thought "what if BTC falls some more"

A voice in my head said then you'll buy.

Nice post I'd like to apply this to every crypto tho...

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1

I'd recommend on focusing this strategy on Bitcoin and not other cryptocurrencies.

This is because Bitcoin's supply shocks every halving, make it ideal to buy the dip and dollar cost average.

History repeats itself.

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0

What does it mean for its supply to shock every halving

0
1 yr

If anyone is looking for hedge against the inflation then there is no asset that could even be compared with Bitcoin. But the mistake people are doing right now is they are investing in the bitcoin without proper mind make up and knowing about the Bitcoin which is making many of the traders falling into the game of pump and dump. If you can hodl, you will win. The theory is simple for Bitcoin investment and the price will cross it's previous ATH but the question is matter of time.

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