There is a lot of talk about the crypto dip at the moment. This has led to a lot of crypto investors wondering if they should buy in the crypto dip or not. Before we look at reasons that you may or may not want to buy in the crypto dip, let’s first look at what that means.
What Does ‘Buying The Dips’ Mean?
Buying the dips is simply purchasing a crypto asset when the price has dropped. Buying the dips is a phrase commonly used by many investors in a wide range of investments. The goal of buying the dips is that you will sell the asset later when the market corrects itself and the prices rise once more.
There is a lot that goes into manipulating the crypto dip. This means that there is a lot to consider as a crypto investor. It’s important to decide what you want from your crypto investment. Then, you can decide when the best time to buy is, which coin to get, how much you are willing to spend and how much of the crypto coin you want.
As with all investments, there is never a guarantee of profit. This is exactly the same with crypto and crypto dips. Not all crypto dips will guarantee a profit. However, some will result in a profit. Even if there was a persistent uptrend further to whatever resulted in the dip, there is still no guarantee of a profit. It’s a good idea to think of a crypto dip as a bargain, as opposed to a free real estate.
In this blog post we look at why you should or should not consider buying the crypto dips. There is a lot to consider, so sit back and relax.
Why You Should Buy The Dips When There’s An Uptrend
An ‘uptrend’ is when the price of an asset moves in a generally upward direction. The highs and lows of the crypto asset will tend to be higher than previous peaks and troughs in an uptrend. This will give you a good idea that when the price drops there is still a very high chance that the price will rise back up again.
Many crypto investors will choose to buy the dips when a crypto coin pulls back with the expectation it will soon return to it’s original worth and position. There have been a lot of credible successes through the buy the dips investment method. However, in reality there is no fool proof way to know what any asset, crypto or otherwise, will do and how it will perform.
There is a way of mitigating the risks when buying the dip during an uptrend and that is with a signal line. This means that is a crypto coin has a known uptrend it’s lowest point should never cross this line, the signal line. Once the crypto coin does cross this signal line it shows that the crypto coin may have entered a downtrend.
Why You Should Buy The Dips To Enter A Crypto Network
This crypto investment method is known as staking. It takes place when the price of a crypto coin drops. This then signals that it is a good time to buy into a crypto network and start earning more crypto coins.
For crypto staking, some of the modern cryptocurrencies will use a validation system. This is known as ‘proof of stake’. It enables crypto coin holders to verify their transactions. This means that they are able to earn more crypto coins than they have in the crypto network.
Through the process of buying the dips as a way to enter a crypto network you will be able to start earning from crypto at a much lower cost. This will coincide with the increase in transaction traffic within the crypto staking network, due to the price drop of the crypto coin.
Why You Should Buy The Dips Of Well-Established Cryptocurrencies
There are cases when investors have managed to survive some of the biggest crypto crashes. Bitcoin is one example of this. It is a popular and well-established crypto coin. It is also one of the most volatile assets in history. In 2011, the value of Bitcoin dropped by over 99%.
While some saw it as a miracle for investors to recover anything from the drop, they did. Despite this well recorded drop, and many other drops, storms and fluctuations, bitcoin has managed to keep a persistent uptrend since its inception.
Take a look at the well-established crypto coins out there. If they are still standing from dramatic drops, storms and fluctuations – it is likely that they will continue to rise again, stand strong and receiver from a dip – just like your crypto investment will.
Why You Should Not Buy The Dips To Average Down
More often than not, as crypto coins drop in price, many crypto investors will choose to buy more of it. This makes the average price at which they have bought their crypto coins lower. It will then appear that you have spent less on a coin, meaning that the price doesn’t need to go that high for you to make a profit on your crypto investment.
This strategy works for long-term investors who are happy to wait until the price rises so they have the potential of making a real profit. The crypto investors that use this technique have a clear and precise vision of how the crypto asset will perform now, next week and months or even years down the line. These types of investors are unphased by downtrends. Instead, they will buy the dips with unyielding conviction.
If you are not a long-term investor and will find yourself affected by downturns, then this is not a good crypto investment option for you. Instead, we recommend that you try not to overcommit to a single crypto coin.
Why You Should Not Buy The Dips Before A Crash
If you are unsure if the dip is a temporary drop or the beginning of a downtrend, it is not a good idea to buy. This is because many things can happen to cause a crypto dip. It could be a network overload for example. However, it could be down to account hacks or regional bans. These are just a few examples of what can affect and result in a crypto dip.
Generally speaking, when an influential corporation announces acceptance of crypto coins, it is a sign that the price of that crypto coin will rise. However, it is the same the other way too. If an influential corporation decides that they not take the crypto coin, at a later date, then it is likely that the price of the crypto coin will decline.
We recommend that you make sure you know what has caused the dip before buying the dip. This way you will have a better understanding if the market will be able to correct itself at a later date.
Why You Should Not Buy The Dips Of New Coins
It is commonly seen that when a crypto coin or token hits the market it will maintain its uptrend for the first few cycles. This is known as the excitement period when everyone wants to get involved in the ‘next best thing’. Everyone is buying into the enthusiasm instead of buying into the financial vision.
However, eventually a dip will come. This can mean one of two things. It could be a temporary dip and will come back up, even higher. Or it could mean that people have lost interest and they are cashing in their early investments.
If there is a chance that it could be the second option, then it would be a terrible idea to consider holding the crypto coins as a new investor. You definitely don’t want to put more money into the potentially imploding bubble either.
Everyone likes a good opportunity, and this is the same in the crypto investment world. However, it is important to note that the crypto investment opportunity is only as good as what you are willing to invest. Crypto dips do and always will happen all the time. What is important to note is that not all will recover.
As we have said before, the key to cryptocurrency investment success is to do your own research. By completing your own extensive research, you will be able to find out all the information you need. Then, dependent on your investment goals, you will know if you should be buying the dip or not.