Bitcoin Blog | Bitcoin and other cryptocurrencies crashed and have been sidelined amidst the ups and downs of the stock market, plus the global rise in inflation. The perennial question we get is: “Should You Buy Bitcoins During the Dip?”
The prices of cryptocurrencies fell again and again since June 2022, and Bitcoin fell to its lowest level since December 2020. Just two months ago, prices moved in a similar way. After the crypto market lost more than $200 billion over one weekend in June and the U.S. crypto lender Celsius Network stopped all withdrawals, Bitcoin prices dropped by about 9 percent in those 24 hours to $20,500 or INR 16,00,530.
Ethereum (ETH), which was worth about $1,400 on that weekend, fell about 11 percent in the last day to around $1,000. Cardano (ADA) had the same thing happen to it, and it fell about 11.5% the next day to $0.453698. It has gone down by more than 25%. So what now?
Based on the old investment saying “buy the dip,” investors may be looking to get into the volatile crypto market in the hopes that this is just a short-term dip and not the start of a long-term bear market.
Since November 2021, when it hit a record high of $69,000, it has been going down. Should you run a mile?
If you think now is a good time to buy, here are some historical trends, opinions from experts, and buying tips for people who are new to Bitcoin and cryptocurrency in general.
Why did bitcoin go down?
In 2022, the prices of bitcoin and several other major cryptocurrencies have been going down.
As inflation and interest rates go up, cryptocurrency and stocks, and shares also go down. This is because investors want to take less risk.
Coinbase says that the price of bitcoin fell below $20,000 at the beginning of July. That’s a long way from November, when prices hit a record high of $69,000.
Why has there been so much trouble lately?
- Uncertainty about rising interest rates in the US and UK, which caused risky assets to be sold off.
Rising inflation has led to a rise in the cost of living, which means investors have less money to spend on Bitcoin and other cryptocurrencies. - China is making it illegal to buy or sell cryptocurrencies.
- There have been rumors that Russia could ban trading and mining of cryptocurrencies, which would cause their prices to drop.
- There have also been hints that cryptocurrency investments may be subject to more rules in the future.
Even though this isn’t as bad as the crash in 2018 when Bitcoin lost 80% of its value, experts say things could still get worse for people who still have BTC.
Because of these kinds of losses, the Reserve Bank of India, which is in charge of India’s finances, has warned crypto investors many times. It says that people should be ready to lose everything they invest because there are no guarantees of returns.
Will bitcoin rise again?
No one can say for sure if bitcoin will get back to the highs it reached at the end of 2021.
Crypto’s price is based on nothing but speculation, which makes it hard to know what the future holds for this volatile asset. In other words, how well bitcoin does will depend on how the rest of the cryptocurrency crowd is doing.
The way Bitcoin has done in the past might give some investors hope that it will fully recover. In 2018, the price of bitcoins fell by 83 percent, but in 2020 and 2021, it reached new record highs. People who had saved money during lockdown helped keep the price up.
But there is no guarantee that bitcoin’s price will go back up to the $69,000 level it reached in November 2021.
If you have money in bitcoin right now, you should probably hold on to it for the time being. But if you’re waiting for bitcoin to come back, you might need to be very patient.
Is it a good time to buy?
Is it a good idea to “buy the dip”? The idea of “buying on the dip” is based on the idea that price drops are short-term problems that get fixed over time. Dip buyers hope to take advantage of price drops by buying at a discount and making money when prices go back up.
Crypto markets are unstable, so it’s risky to buy cryptocurrencies at any price, let alone a dip that could turn into a long-term trend. Prices could go back to where they were, but they could also go down, even more, leaving your investment in the red.
If the past is any indication, the current drop (or crash, depending on your point of view) could bounce back like it did last year, when prices dropped to similar levels before going back up to where they were before the drop and even reaching their peak in the fall. But it’s possible that they won’t.
So far, the prices of Bitcoin have shown a certain amount of seasonality. They seem to go down in the spring and then go back up in early summer. But the past performance of any kind of investment, let alone the unpredictable world of cryptocurrencies, is no guarantee of future performance.
People who want to “buy the dip” should decide how much money they are comfortable spending each month to buy BTC or ETH and not worry too much about what will happen to prices in the next two years.
Spread your risk. It’s important to have different altcoins in your crypto portfolios to spread out risks.
Sources: The Times UK, Forbes
