Don't Buy The Bitcoin Dip
With bitcoins price dipping significantly below $100k again, the buy the dip cheerleaders are out in full force.
But Im here to offer a different perspective: Dont buy the dip.
Before I continue, let me please make it clear that nothing that I write in this Take is investment advice.
Why would I say such a thing? Is it that I hate bitcoin all of a sudden?
No.
I have other reasons for making such a statement.
The first is that Im trying to keep you from becoming exit liquidity for people like this:
Dont worry guys.
Breadman (@BTCBreadMan) January 8, 2025
The retards are coming. pic.twitter.com/1YL8keRHYa
The second is that I like to buy bitcoin when its truly selling at a discount, not just when it appears to be selling at one.
Let me explain.
Right now, bitcoin is trading about 13% off of its all-time highs. While that may be a significant discount for an asset in the world of traditional finance, its hardly more than a daily fluctuation in the world of bitcoin.
In the four-year bitcoin cycles, bitcoins price tends to skyrocket during the years of and after its halving. And then the year that follows tends to be pretty terrible for bitcoins price. During that year, bitcoins price hits a low, which tends to be in the range of the prior cycles high.
That was a bit confusing, so let me give you an example.
In 2022, the last pretty terrible year, bitcoin's price dropped to about $15,500, which was actually about $3,500 lower than bitcoins top from the previous cycle $20,000.
If something comparable were to happen in 2026, wed see bitcoins price at approximately $53k (23% below the previous cycles all-time high of $69k). Now, that would be a significant discount and a dip worth buying.
I dont share this perspective to dissuade you from continuing with something like a dollar-cost averaging bitcoin investment strategy (one of the best strategies out there for the average retail investor). Instead, I share it because if a loved one came to me and asked me if now was a good time to buy bitcoin, Id say not really.
I try to maximize the financial upside (in fiat terms) of investing in bitcoin as much as possible for those who ask me about investing in it especially those who are new to it. And while I could maybe help someone trade in and out of a bitcoin position in the next year or so, I dont like to do this, as I encourage people to buy and hold bitcoin for the long haul.
But, Frank, the U.S. might announce a Strategic Bitcoin Reserve and other nations may follow suit! And look at all the companies buying bitcoin for their treasuries!
Yes, these things are happening, and so are things like Bhutan selling bitcoin and so have things like Germany selling bitcoin and Tesla selling bitcoin.
Up until now, all bitcoin price cycles have been similar. So, while it looks like we have another year of bitcoin price upside in store for us, I think we drop far lower than this current price level when the tables turn.
And thats when Ill be proactively buying.
This article is a Take. Opinions expressed are entirely the author's and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
Read more: https://bitcoinmagazine.com/takes/dont-buy-the-bitcoin-dip
Text source: Bitcoin Magazine: Bitcoin News, Articles, Charts,
