Is Now a Good Time to Buy Bitcoin? Are Dips Opportunities in Disguise?

It’s the million-dollar question: Is now a good time to The phrase "buy the dip" might be useful here. It doesn’t mean stacking guacamole in your trolley. It means buying Bitcoin when the price is lower than it has been before, working on the understanding that the price might go up again.

Does buying the dip work? It depends on a few things.

Crypto’s cyclical nature

Cryptocurrency markets are notoriously volatile, but they also exhibit perceived cyclical patterns. Bitcoin has historically gone through boom-and-bust cycles roughly every four years, often tied to its .

For instance, before the 2020 halving, Bitcoin to around US$5,200 before surging to nearly $69,000 by November 2021.

Investors who bought before halving, essentially “buying the dip”, saw good returns. Similarly, after peaking in 2021, Bitcoin fell to around $16,800 in late 2022. Those who bought that dip saw prices climb back toward $30,000 by mid-2023.

These cycles may be demonstrating that dips can be temporary setbacks in a broader upward trajectory, particularly for established assets like Bitcoin and Ethereum.

Mean reversion and market psychology

Markets, including crypto, often exhibit mean reversion. This is a tendency for prices to return to an average or trend line after extreme movements.

When crypto prices tumble, it’s typically driven by panic selling, regulatory news, or macroeconomic shocks (e.g., interest rate hikes).

However, once the fear subsides, fundamentals like growing adoption or institutional investment tend to reassert themselves, pulling prices back up.

This reflects a key psychological truth. Fear-driven sell-offs often overshoot, and possibly can lead to creating undervalued entry points for savvy investors.

Historical data for other cryptos

Ethereum tells a similar story to Bitcoin. After from $1,160 at the start of 2018, to $86 later that year, it rebounded to over $4,700 by 2021.

Investors who bought the 2018 dip multiplied their investment in just three years. While past performance isn’t a guaranteed predictor, the consistency across multiple cycles suggests that dips may be opportunities in disguise.

Accumulation by whales and institutions

Another proof point lies in the behaviour of large players. On-chain data frequently shows “whales” (holders of massive crypto wallets) and institutions accumulating during dips. For example, during the 2022 bear market, firms like MicroStrategy continued at prices below $20,000.

This buying behaviour signals that these large companies think that prices will recover.

The long-term growth thesis

Crypto’s value proposition, that of decentralisation, limited supply, and increasing uses, might give crypto investors buying the dip confidence that the price trajectory will keep going up.

Bitcoin’s capped supply of 21 million coins, for instance, contrasts with fiat currencies prone to inflation. As adoption grows (via things like payment systems adopting it, use in DeFi or ETFs), demand could outpace supply over time, driving prices higher. Dips, then, could possibly be short-term noise in a long-term signal of growth.

Caveats and risks

Buying the dip isn’t foolproof. The biggest “BUT” in this whole idea is that no one truly knows when dips will arrive and when the price will hit the deepest part of the dip. And of course, not every crypto price recovers. Altcoins with weak fundamentals often fade into obscurity after crashes.

Another risk is that prolonged bear markets can test patience, making investors want to sell out for good and find new investments.

The dip-buying strategy probably works best with a long-term horizon and a focus on fundamentally strong projects.

Conclusion: Is it the right time to buy Bitcoin?

Dips often mark the best entry points for outsized returns. The hard bit is knowing when the dips won’t go any deeper. In a market known for volatility, some investors see temporary declines as opportunities and buy, while others give up, sell, and cry. See you at the next bull run!