Should you buy the dip in crypto crash? – Forbes Advisor Australia

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The principle of buy the dip is based on an assumption price drops are temporary aberrations that correct themselves over time. Dip-buyers hope to exploit dips by buying at a relative discount and reaping the rewards when prices rise again.

Crypto markets are volatile, so buying cryptocurrencies at any pricelet alone a dip that might become a long-term trend is risky. While prices could return to previous levels, they could also fall even further, leaving your investment underwater.

If the past is prologue, then the current dip (or crash, depending on your perspective) could bounce back as it did last year, when prices fell to similar levels before returning to pre-dip levels and even peaking in the autumn. But of course, they might not.

Bitcoin prices in particular have shown a degree of seasonality to date, appearing to fall in value to lesser or greater extents in the autumn before bouncing back in early winter. However, as with every kind of investment, let alone the unpredictable world of cryptocurrencies, past performance is no guarantee of future results. At the time of writing, Bitcoin was still hovering at $US20,000, where it has been for a number of weeks.

Co-Founder at Coinrule, Oleg Giberstein, said: Many a novice investor has been burned trying to catch falling knives.

He advises those committed to buying the dip to decide on a set amount of money theyre comfortable with using to buy BTC or ETH each month and not to worry too much about what happens to prices over the next two years.

Pavel Matveev of digital exchange Wirex advises buyers to hedge their bets. He said: Its important to diversify your crypto portfolios with different altcoins to mitigate risks.

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