Bitcoin’s Plummet Gives an Opportunity to Buy the Dip

Bitcoin cryptocurrency symbol on yellow balloon.
Velishchuk / Getty Images/iStockphoto

Bitcoin’s value fell by as much as 15% last weekend over a mix of regulatory concerns, power outages in China and worries over inflated prices, Bloomberg reports.

See: The Price of Bitcoin Over the Last 10 Years
Find: Want to Invest in Bitcoin but Don’t Know How? We’ve Got You Covered

While some remain skittish, Bitcoin bulls welcome a long-sought-after trading opportunity: buy the dip.

Global head of research at New York Digital Investment Group Greg Cipolaro wrote in an email to subscribers, “Our desk has been a net purchaser over the past 24-48 hours,” CoinDesk reported.

Cipolaro continued that investors having  a buy-the-dip mentality during these events is indicative of an increasing tolerance to Bitcoin’s volatility.

See: 10 Best Cryptocurrencies to Invest in for 2021
Find: Bitcoin Reaches Record High Above $64,000

He added, “We believe the root cause of the sell-off had to do with investor positioning rather than fundamental news. Simply put, traders were overleveraged and positioned long, resulting in forced liquidations,” indicating that investor sentiment in certain markets, and not Bitcoin’s overall value, has changed.

Building Wealth

The activity is reminiscent of similar dips last month. Coindesk reported in late March that Bitcoin buyers “may have bought the recent price dip and now are taking down their cryptocurrency from exchanges … To digital-market analysts, it’s a bullish signal traders or investors might be preparing to hold their BTC for the long term.”

See: Mark Cuban the Next Billionaire to Go All in on Bitcoin — ‘The Number of People Who Own It Could More Than Double’
Find: Why Some Money Experts Believe In Bitcoin and Others Don’t

In late March, Bitcoin experienced similar volatility when prices slumped to $50,000 from a then-all-time high of $56,000.

For long Bitcoin investors, or for investors who now want to get in on the game, the drop in price signals a good buying opportunity. The buzz around “buy the dip” could also benefit long investors who have underlying fears about Bitcoin’s volatility but stand to profit from rallying other investors to buy in and maintain price levels.

More From GOBankingRates

Share this article:

Building Wealth

About the Author

Georgina Tzanetos is a former financial advisor who studied post-industrial capitalist structures at New York University. She has eight years of experience with concentrations in asset management, portfolio management, private client banking, and investment research. Georgina has written for Investopedia and WallStreetMojo. 
Learn More