Buying The Dip: A Guide

Well, what a start to the week.

The cryptocurrency market can seem very strange to the uninitiated. The massive gains that drew you and I in are always paired with crushing losses. The inherent volatility of this market can be tough to deal with. In each of the last few crypto bull runs there have been five or more price corrections of 30% or more.

That’s five 30% losses on the way to new all-time highs. Some see wild unpredictability and manic price changes; I see opportunity.

Allow me to let you in on a little secret.

Yes, crypto is in fact far more volatile than other markets. However, the volatility is what allows for days of 10%+ gains on Bitcoin (BTC) and the 100%+ gains on altcoins over the span of just a few days. That volatility can also come through in swift sharp dips in price, as we saw in the market on Tuesday.

You should view such dips as buying opportunities. Cryptocurrency’s volatility is what makes it one of the best markets in the world to trade. This week’s price correction isn’t a curse…it’s a blessing.

Don’t believe me? Allow me to demonstrate my point using facts.

Take a look at the Rekt chart below, which expertly highlights the five 30%+ price corrections from the 2017 bull run:

The chart shows many “huge” price corrections on Bitcoin’s 2017 ride from $1,000 to the peak of just under $20,000. Imagine if you had sold your Bitcoin during one of those price corrections because you couldn’t stand the volatility. You’d be left with major regret.

Now, imagine if you bought during each of the six dips on the chart above. How much Bitcoin would you have and how much money would you make? Let’s say you start off 2017 with 1 Bitcoin worth approximately $1,000 and that you bought another $100 on each dip.

You would buy 0.129 of Bitcoin on Jan 11 when BTC dipped to $770. Then you’d buy 0.108 BTC on March 24, then 0.052 on July 16. On September 14, you’d buy another 0.03 BTC, and then 0.017 BTC on November 12. You’d have grown your 1 BTC to 1.336 Bitcoin by simply buying another 10% of your original investment on each dip. You’d have grown your gains by over 33% from simply buying the dips.

That would have translated to an extra $6,000 if you sold at the peak of the bull run, after adding only an extra $600 to your initial position. That’s 10x on your money from buying the dip.

Boom! That’s the 10x gain that so many of us are looking for, hidden in plain sight.

Dip buying is such a simple strategy you might be surprised that it works so well. The trick is knowing what assets to look for and knowing the difference between a dip and the market top.

Now that you know why buying the dip is so important in a crypto bull market, let’s see if the market is currently in a dip.

As of this writing on March 19, cryptocurrencies across the board are down from their recent highs, but seem to be up from the Tuesday morning lows. Bitcoin hit a low of about $62,500 so far, but is now trading at around $65,000. So far price has dipped about 15% over the course of just the last six days.

Considering the past few bull runs have had dips of over 30%, we would like to see prices correct a little further, but the price action on March 20 and 21 will really tell us what to do.

If Bitcoin breaks below $62,500 in the next 48 hours, we will know that this is a real dip and we should prepare to buy soon. Hooray, we’d get a chance to buy BTC at lower levels.

If it doesn’t break down below that level, we would have missed this small opportunity window. No worries; that would just mean the price of Bitcoin isn’t sinking.

It can be hard to spot the exact bottom of a dip and pick the best buying opportunities, but we just need to be patient and let things play out. Bitcoin typically tends to have a price correction around the time of the halving and the market is currently overbought. This could very well be the halving dip that we’ve been waiting for. We just need a bit more data to figure that out. So stay at the ready and be prepared to buy if price dips further.