Market Dips in Cryptocurrency

Dip is a situation when markets experience a short-term or prolonged downturn.

What is dip?

Dip – in the traditional sense, it means to take something out of liquidity quickly or briefly. However, in the cryptocurrency world, dip is the process of buying an asset after it has declined in value. Buying a dip implies that you have an opportunity to invest in a coin or token that has experienced a short-term or potentially long-term decline in its value.

Most cryptocurrency investors became familiar with the cryptocurrency market only after the cryptocurrency market downturn in 2018. In fact, it was during this year that many investors were able to learn just how risky and speculative the cryptocurrency market can be. But buying a coin or token on a downtrend does not mean that their price is guaranteed to rise over time, as there are risks in almost everything about investing.

This requires a strong emotional intelligence and an understanding of the nature of the market you are working in. There is a phrase regarding dips and investing: "buy the dip." It refers to buying an asset or security after the price has repeatedly experienced a short-term decline. By buying a dip, you can make a profit during long-term uptrends, but it is unprofitable or difficult during secular downtrends.

Buying dips even has the potential to lower the average cost of holding a position; however, the risk, like the benefit of buying dips, must be evaluated on an ongoing basis. Remember, buying on a decline does not mean you are guaranteed a profit.

The value of an asset can fall for a variety of reasons, including changes in its underlying value. If the price is cheaper than at any time in its history, it does not mean that the asset represents good value.