By Waliu Adeyeri
The value of Bitcoin and several other cryptocurrencies crashed today in reaction to The People’s Bank of China’s (PBoC) warning to local businesses from dabbling into Bitcoin and other cryptocurrencies.
It becomes important for long term investors to start buying the dip at this critical stage.
According to a report, the sharp crash in price (correction) comes as The People’s Bank of China (PBoC) warns local businesses and institutions of dabbling into Bitcoin and crypto. This has got many holders flipping their assets at ridiculously low rates.
Speaking with TheNewsBeam crew, a cryptocurrency expert, Mr. Muideen Adegoke, said it is time for long term investors to start “buying the dip.”
What is it to ‘Buy The Dip?’
The term should not be foreign to pros, and active investors in cryptocurrencies. However, newbies and possibly new investors might just be coming across this for the first time.
To ‘buy the dip’ in a speculative trade like cryptocurrency and forex simply means to take risk in purchasing a commodity (Bitcoin) when its price falls in value.
From the above definition, the process of buying the dip includes taking risk. It is risky because, while others are worried and in doubt based on the present loss they have suffered from the drastic crash, you are hopeful of a swift increase in value (which may/mayn’t happen).
According to Investopedia, to buy the dip, means “purchasing an asset after it has dropped in price. The belief here is that the new lower price represents a bargain as the “dip” is only a short-term blip and the asset, with time, is likely to bounce back and increase in value.”
Now that you have known what it means to ‘buy the dip,’ let’s discuss why you should buy cryptocurrencies now.
Why Should I Buy Cryptocurrencies Now?
Adegoke said: “The crash in the price of Bitcoin and other cryptocurrencies is an opportunity to long term investors who have a healthy risk appetite.
“As we all know, cryptocurrency is a speculative trade that falls and rises. This is called correction stages. In Bitcoin, there is what we call timeframe; we have the lower timeframe and the higher timeframe. So it’s part of the crypto market to experience falls.
“Last year, around November, the value of Bitcoin was around $20,000. As of May this year, the price peaked at around $60,000.
“Speculators have foreseen Bitcoin to reach $100,000. Investors with long term investment, will see this dip as an opportunity to buy now because we are expecting more companies to adopt cryptocurrency and thereby positively make the market recover.”
Can Short Term Investors Buy Cryptocurrencies Now?
No. This is because short term goal investors are usually not patient enough to wait till the market recovers again. So the best is to sell your cryptocurrency inorder to avert further loss.