What Does 'Buy the Dip' Mean?

Wait what? It's bitcoin still dipping? Learn what "Buy the dip" means and why it's part of the bitcoin culture

What Does 'Buy the Dip' Mean?
May 29, 2024

"Buy the dip" is a common phrase among investors who believe strongly in the future value of an asset, even when its price starts to drop. Generally, this phrase is used to indicate that they have purchased the asset despite the drop, expressing their expectations for future value.

As Bitcoin is very volatile, Bitcoin enthusiasts often use this phrase, more than they wish.

However, most of the time, this phrase is used ironically to highlight that the price drop does not stop investors from believing in Bitcoin.

Isn’t it reassuring to buy thinking it’s just a temporary low and that it’s only sales?

Understanding Dips: What Do They Mean?

A "dip" is a relative concept that varies according to each individual and each investment strategy, as well as investors' perception of the market. Generally, a drop of more than 5% in BTC price is qualified as a dip.

One of the most adopted investment strategies is Dollar Cost Averaging (DCA), which suggests that investors, especially beginners, should make regular purchases regardless of price fluctuations.

Check out our article on this cautious investment strategy suited for beginners.

However, some investors take a less rigorous approach and buy as soon as the price of BTC dips and drops by 5%, 10%, or even more, based on their own assessment.

Thus, the definition of a "dip" varies for each person, with each individual deciding whether a downward movement is a significant correction or simply a natural price fluctuation. Unfortunately, Bitcoin price movements are unpredictable, and posting a tweet saying that you've just bought the dip does not guarantee that the price will stop dropping.

Why is the Market Continuing to Dip?

Although there are ways to anticipate the end of a dip, it is impossible to be 100% sure, even professional traders have strategies that allow them to absorb losses. Anyone claiming they can predict where the price will go with certainty is a scammer.

After the bear market of 2022, where the price of BTC fell from $69,000 to $15,000, the phrase "Buy the dip" became an ironic meme used to amuse investors who were losing money (at least those who could still laugh about it).

During this period, shitposters had become somewhat like the musicians on the Titanic, became popular during the market's euphoric phases, they continued to post memes despite Bitcoin's plunge. The phrase became a running gag used at every drop, which were frequent in 2022.

Adopting a strategy of buying the dips doesn’t really make sense in a bear market, because by definition, a bear market is characterized by lower lows. Indeed, price movements never occur in a straight line, they are always marked by periods of stagnation or temporary rebounds, making the prediction of lows extremely uncertain.

To conclude, let's say it: there is no wrong time to buy Bitcoin. Even if its price can dip a lot and for a long period, in the long term, Bitcoin is always going up. We don't provide financial advice, but even if you buy Bitcoin at a market high, you won't lose money if you can wait long enough.

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