Prominent cryptocurrency traders advise not to “buy the dip” yet
- Bitcoin price dropped from $33,600 to a low of $28,130 within hours and managed to recover to $31,000.
- Several analysts have warned other investors to be careful about buying the dip blindly.
Buying the dip is a common expression among cryptocurrency investors. However, in practice, it is far harder than it seems. The idea of buying the dip only works if the asset rises higher afterward. Back in 2017 when Bitcoin hit $20,000, buying the dip on the way down was certainly not the best strategy as the digital asset continued declining hitting $3,000. Of course, if you held your positions all the way until now, you would have profited but not everyone can afford to be at a loss for three years straight.
Buying the dip is not easy and investors should remain skeptical
After Bitcoin’s most recent dip, several prominent analysts have stated on Twitter that investors shouldn’t rush to buy the dip just yet. It’s critical for an investor to have levels prepared and only buy using money that he can afford to lose.
Most people are gonna say buy the dip, nothing wrong with that.
— Mayne (@Tradermayne) January 4, 2021
In my opinion unless you are really nimble, have premapped levels and a good grasp on what you’re doing you are best to sit on your hands after a move like this.
Let price stabilize form a low, then get involved.
Tradermayne states that although buying the dip is not a bad strategy, most investors should probably wait until the volatility settles down. Similarly, Michael van de Poppe seems to think the same.
Finally, a correction.
— Michaël van de Poppe (@CryptoMichNL) January 4, 2021
To the people that wanted to #FOMO yesterday:
Red candles and dips are interesting for entries.
And in general; don't rush into positions. Higher timeframes will play out and give you opportunities in general.
Poppe mentions that dips are interesting for entires but rushing into positions is a bad idea. Investors should look for higher timeframes to analyze the trend. However, not every analyst is that cautious.
Did you buy the dip like you promised yourself you would?
— Max Keiser (@maxkeiser) January 4, 2021
$42,000 still in play #Bitcoin
Max Keiser, Bitcoin pioneer and co-founder of HeisenbergCap asked investors on Twitter if they bought the ‘dip they promised they would’. Keiser also stated that Bitcoin price of $42,000 is still in play.
Bitcoin just crashed to it’s all-time high from last week.
— Pomp (@APompliano) January 4, 2021
Everyone relax.
Similarly, Pompliano told investors to relax, and although he didn’t specifically mention buying the dip, he stated that this crash was only Bitcoin’s all-time high from last week, basically saying that it’s a healthy correction.
Author
Lorenzo Stroe
Independent Analyst
Lorenzo is an experienced Technical Analyst and Content Writer who has been working in the cryptocurrency industry since 2012. He also has a passion for trading.
