Bitcoin has a history of volatility but they all pale in comparison to what happened in the last 24 hours. The king coin bowed down to as it lost nearly 40% of its value in recent trading. The last time something similar happened was back in 2013 when bitcoin plummeted by close to 50% in a day. This signifies Bitcoin’s worst crash in its 7 years. Amid all these fears, is it actually the right time to buy that dip?
Bitcoin is performing like a risk-on asset. The safe-haven and uncorrelated narratives of the top cryptocurrency have been exposed. Liquidity in the bitcoin market is being sucked dry as the cryptocurrency is dangerously close to trading back to $3,000 levels.
In other words, everyone is selling and almost no one is buying.
Is It Time To Buy That Dip?!
In every chart, no matter which tradable asset, there are recurring wave patterns all the time, on any time frame. Due to the wave nature of price movements, reversals occur frequently. When the price has just fallen in a wave down, usually there will be a point where it bounces back up, more or less.
What goes up – must come down. Highs and lows play together all the time. The recurring lows are used as entry areas in overall upward trends.
That’s what they call “Buy the Dip!“
Buying the dip, means purchasing something when the price goes down, has been a winning strategy for Bitcoin investors since 2009.
The concept is similar to Finance telling you to, “buy when there’s blood on the streets”. It’s the same with cryptocurrency.
If you focus on only buying dips, you can never make too big mistakes. Price should at least go up a little further if you bought shortly above the reversal point of the dip.
That means that in most cases you are able to move up your stop loss order to break even very soon. Then you can simply watch if the trend goes on or if you get stopped out, without the risk of any loss.
Many traders call ‘buy the dip’ when they believe that the underlying asset is in a strong long-term uptrend. That seems to be anything but the case when it comes to global stock markets.
The Worst Yet To Come Or The Other Way Round?
However, most analysts believe that the worst is yet to come as the combination of coronavirus fears and an inflated bubble cause deeper losses. However, that shouldn’t be the case with Bitcoin.
With the Bitcoin Halving approaching, many analysts have already confirmed that the number-one cryptocurrency is already firmly back in a bull market.
Moreover, some traders using technical analysis have pointed out that cryptocurrency prices are getting ready for their “next big mark-up.”
If BTC price is indeed set to see massive percentage gains later this year and into 2021, it would make sense for those than can to buy the dip. Bitcoin’s plunge over the weekend and in start-of-week trading might come as a surprise to some.
The price action of mid-2019 might be a foggy memory amid the frantic volatility of financial markets right now. However, back then plenty of commentators were piling in to proclaim that the asset’s time as a creditable safe-haven asset had come.
Where the stock market has investors and traders with decades of experience. The majority of cryptocurrency investors are beginners, or “retail investors”, who are more prone to act emotionally during times of extreme volatility.
Investing in cryptocurrency is an emotional roller coaster, even for experienced traders. Don’t let your emotions control your actions. Stick to your strategy, remember why you bought the coins you did, and don’t panic sell.
Note: As the Crypto News Point Team, we would like to point out that the following information cannot be regarded as a piece of investment advice. We only share our views on the crypto market. Readers are invited to form their own opinions on this article to conduct their own research.