What is to ‘buy the dip’ in Crypto and Trading?
If you are new to crypto, then this is the term you keep hearing all the time.
Buy the dip? What the heck does it even mean?
To get started, we must first appreciate that crypto is no different from other markets. Active buyers and sellers define market equilibrium.
The 'unregulated' aspect doesn't count much considering the pace of innovation in the space and how policymakers formulate laws to facilitate smooth entry and investment. It is also not forgetting the educational campaigns of the last few years that is now bearing fruits.
So, just like in any other markets, dips and price gains move in lock-steps. Here, I mean that whenever Bitcoin prices, for example, rise, they don't increase 3X in a single perpendicular move.
Often, the uptrend is clear but in waves.
Now, the term 'buy the dip' is a rallying call by optimistic traders/analysts who believe that despite price contractions, bulls will take charge in coming sessions. Therefore, purchasing the asset in every correction lower—or 'dip' is a bargain.
This dip, in their assessment, won't last long and is only but a minor blip before the underlying asset's valuation rises to new highs.
Over the last few days, Bitcoin permabulls, for instance, have been urging traders to load on every correction since their prognosis suggests extended gains of the BTC/USD price towards $70k.