It sounds good, in theory. You buy when it dips, because theoretically, it could go up, and then you are in the green. It goes down, then the assumption is the that "it will go back up!"
A perpetual sunshine mentality that the downtrends are only temporary. That seems to me like what the stock market and legacy finance enthusiasts do. They don't see an overvalued market, do they? Maybe some do.
But some see a dip and think it's just a dip, and you buy it up because it's only temporary. It will go back up!
And are they right?
YES! It has been doing that.
Will they always be right?
NO!
It can't keep going up forever. It's unreal. At some point the mega printing (or digital money creation) will smack up against hard factors of reality.
People in crypto think the same way.
BUY THE DIP!
Look, BTC and whatever else just tanked over some nonsense fear of a new variant that doesn't do anything special. So buy? Maybe. Maybe it will go back up. Hell, the insanity of the market manipulation and fantasy isn't over, so yeah probably.
But here's the thing. There was a dip, or so-called dip, last spring. I believed that we were in a mega bull run year for crypto. I was thinking the same as everybody else who buys the dip, that obviously will go back up.
So what did I do? Well bitcoin went from $60,000 down to the $50,000 range. So I bought the dip just like the phrase goes. I bought the dip near $51,000.
I took money from my bank account and I transferred it to a company that sells crypto for Fiat. I bought crypto. I bought the dip.
Yay for me. Right? Wrong.
Things continue to progress downwards for months as bitcoin went down to the $30,000 floor. So what did buying the dip get me. Nothing. My $9000 was worth less in that time, and I had to wait a lot longer for it to come back to that value.
You see, it's not about buying the dip. It's about reasonably calculating where you think a floor is, and buying that dip. It's not about buying the first dip that happens. That's pretty idiotic, as I found out.
Living in the clouds of fantasy and thinking things will just always go up. That any dip that happens is just temporary and then you can be in the green they can profit after you buy during a dip. It's foolish thinking. It's not based in reality. It's just wishful thinking
I was a wishful thinker. I don't buy dips anymore. I learned my lesson. What you need to do is wait for the price to go down by a lot compared to the last time it was at. Then you can more reasonably conclude that it may at some point go back to that high. Maybe.
It's not a guarantee. It could happen. It's a hell of a lot more likely to go back to a high when something loses 50% of value from that high, compared to simply buying a dip relatively close to that high.
To be prudent when there's a dip, don't just jump in thinking that this is a good opportunity to buy something is because the price went a bit lower. You don't know how low it's going to go.
I could've waited until that 50% devaluation of bitcoin from $60,000-$30,000. Then that would have been a smart time to buy that dip. Then everything above is gravy. A 50% drop is a nice target, but maybe it only goes 25%, or 10%. You never know, so don't throw everything at a single dip