Cryptocurrency Dipping: Right Time to Buy?
One of the sectors of investing that does not require the interference of the third party or traditional investors is cryptocurrency. It is contentious, unpredictable, and wildly unstable. The Crypto market has been going through extensive turbulence since the fall in the price of major cryptocurrencies like Bitcoin and Ethereum.
As of November 2021, Bitcoin hit an all-time peak of about US $69000 and is not more than 3 months later, half of its value had lost dipping down to about US $35000. This has generally affected the whole crypto market and made it volatile.
The volatility of the crypto market has activated some investors to sell and offload their assets and minimize losing a lot because of the tension. In the same vein, some investors still show interest to make money by 'buying the dip' hoping shortly that a rebound will happen, especially for those new investors seeking to get started
Whether you are going for the first or second option, you still need to understand what cryptocurrency dipping, can make money with cryptocurrency dipping? What are the best tips to invest in cryptocurrency now. This guide will help you make the right decision.
What is a Cryptocurrency Dip?
A cryptocurrency dip simply means a drop in the value of cryptocurrencies when it is foreseen to increase shortly in the future. Dips are mostly used in expressing 'buy the dip'.
Investing in cryptocurrency when the crypto market is experiencing a dip indicates you taking advantage of the decline in the price of a coin in order to make a profit. Two years ago, the crypto market dipping became known to most cryptocurrency investors after a fall in the crypto market. It opened their eyes to how unpredictable and uncertain a cryptocurrency market can be.
Buying a cryptocurrency when it's experiencing a dip does not guarantee its value scaling up over time and that's because there are risks attached with anything related to investing.
Buying the dip is not the best for a long-term holding investment but can be effective when you are actively trading. Even at that, buying the dip can only be best if you are sure the price of the coin is going to increase.
Cryptocurrency dip, in general, should not be relevant to tokens or coins that do not have the potential of rising in price due to irreversible or unreasonable price circumstances.
Can You Make Money With Cryptocurrency Dipping?
Having in mind that buying the dip does not insure any gain, you still need to know the market nature and also have tough emotional espionage. This implies that just because the value of a coin is more inexpensive than it ever existed in its origin does not make it a good value asset. There are a lot of reasons why the price of a cryptocurrency drops.
The precept behind 'buy the dip' is based on the price fall that is assumed temporarily and then amended over time. This gives investors hope to capitalize on this dip by purchasing at a low discounted price and then when the value rises, earn the rewards.
This fundamental technique known as 'buying the dip' does not mean you should get on to buy while the price of an asset is falling but rather buy after it resolves or average in as it falls. The dip of a coin can be a considerable sense of entry for those trading crypto because of the possibility that it can move beyond or back at that level to trade.
Buying cryptocurrency when the crypto market is volatile at any price to the point of a dip that later can serve as a long-term movement is dangerous. The price can drop beyond your expectations and affect your investment or better still return to its former status.
In the uncertain world of cryptocurrencies, history might not repeat itself meaning past accomplishments do not establish future outcomes. For example, the price of Bitcoin has been unpredictable, seeming to drop in value at one point and then bouncing back to almost the original price.
It is also believed that a bearish market is remarkable to the term 'buy the dip' because investors and traders believe that it is only when the market is undergoing a bearish trend, that's the only time to buy. Well, it isn't. In a bullish market too, there are lows and highs and it is speculated that buying the dip when the market is up generally (bullish trend) is safer.
The gain you make by buying the dip from this bullish trend might not be much compared to when you buy the dip in a bearish direction and the coin in the long run enters a downtrend (bearish) acceleration.
Buying the dip can profit you through long-term uptrends but might not give you any profit if the downtrend is temporal. In an unmoving or bull market, this technique is stable where generally, the trend is either sideways or up as compared to a moving or bearish market where it is down.
For new people who are just entering the crypto world and want to learn how to make money with crypto dipping, buying the dip in a downtrend appears to be the exact method for them. This is because it is incredibly evident that the value of a coin has fallen massively from its history all-time price.
The danger and rewards of buying a dip need to be evaluated consistently because it has a way of lessening your minimum price of acquiring a stance. With all this pointed out, you can make money with crypto dripping by either;
- Hold up till the value settles or if it is showing a bounce-back signal, you can at that point buy.
- Set an order to acquire at a low price and wait until they fill up.
- Create a position that is average and as the value decreases further, you buy more.
Best Tips to Invest in Cryptocurrency Now
As an investor, if you think this is the best time to buy the dip based on your research or as a beginner seeing this cryptocurrency dipping as an opportunity to buy the dip, here are some best tips to help assist you in investing in cryptocurrency now .
Be Calm and Rational
You need to stay calm and allow your head to be cool whether you are selling your assets or see 'buy the dip' as an opportunity to invest in crypto.
You should avoid being emotional when it comes to trading decisions. What can guide you in making a good decision is reflecting on why you venture into crypto trading in the first instance. If the long-term investment is your thing, be rational with it, and if it is a quick trade you are in for, think with that viewpoint.
Thoroughly Access the Problem
Sometimes, it is not the action of price or report that changes the market opinion rather there's just some basic news. China has prohibited the exchange of crypto since 2017 although it doesn't stop individuals from acquiring cryptocurrency.
Its move toward prohibiting financial organizations from providing services related to crypto has damaged the prices in 2021, traders are getting concerned that selling might generate more selling as this news spread over to another crypto market. Since then, the crypto market has been enjoying capital inflow that is substantial which this news had spread.
Volatility is Consistent When it Comes to Cryptocurrency
Volatility is inherent in the cryptocurrency market. The price of crypto is driven only by market opinion, as the technology itself does not provide any cash flow. As a result, the market has the ability to swerve from extreme positiveness to extreme demoralization, as it did in early 2021 and again a few months later.
The hype surrounding Coinbase's IPO assisted to boost the cryptocurrency market's confidence in 2021, but a decrease in financial purpose from the end of 2021 to the beginning of 2022 lowered it. The market is run by the emotion of traders when you have an asset that is propelled by opinion.
Mom and Pop "investors don't often have the advantage of making complex trades using high-powered algorithms which is exactly what attracted experienced traders.
Examine the Future of the Cryptocurrency
Based on recent advancements, how might cryptocurrency core conditions change? Are authorities going to be more strict about it? Will it be embraced by the general public? Can new laws help or hinder bitcoin market? Is there anything that could be influencing the behavior of the market? Hope China's decision to prohibit cryptocurrency is a foreshadowing of what the future holds.
Other governments and the US are looking for ways to legislate cryptocurrencies rather than ban them. Most cryptocurrencies are unsuitable as coins due to high volatility and are offered to those who have no goal to make use of them as a coin. All this should be checked especially for someone investing in long-term crypto.
Make your move
After putting all these listed above in place, then you make your move about your investment with the decision you have made. Make sure you buy cryptocurrencies from a reliable crypto exchange platform to ensure it's safe.
Conclusively, the shocking and alarming announcement has contributed to the current cryptocurrency market volatility. The value of the bitcoin is expected to continue to drop but is speculated to not fall below $30000 says, analysts. Some cryptocurrencies may also see a short-term dip. the digital coin market is expected to rebound and becomes more widely accepted around the world.
At the time, cryptocurrency investments are the most risky. If you're thinking about making a purchase, be prepared for a price shock. If history is any indication of the future, then this dip (or crash, depending on how you view it) could rebound as it did last year, when the markets fell to similar levels before returning to pre-dip levels and even peaking. It's possible, however, that they won't.
In particular, bitcoin prices have shown an element of seasonality to date, declining to varying degrees in the spring before recovering in late summer. Past performance is not a guarantee of future success, and this holds true for any investment, let alone those in the unpredictable world of cryptocurrencies. So, consider your choiceswiely and only buy cryptocurrency now if you can afford the risk.