So, you have seen the price of bitcoin slowly fall in the last few months. If like me, you bought bitcoin at a high value then you may be wondering if you should be buying more. Should you be bringing down the average price of your bitcoin holdings by buying now?
The answer is not so easy. It depends on how much available funds you have to invest in order to do this. Secondly it relies on the fact that buying on the way down means a lot of money spent on bitcoin and no one knows where the bottom will be. It may cause the average person to exhaust their funds before the price finally bottoms out and rebounds. The market will always test you. The market can be down longer than you can stay solvent and longer than you can put up with unrealized losses. So be very careful before plunging back in with this strategy.
The answer I would say is to set a mental limit on what price you would be willing to buy more at. For some that may be 50% of the value they paid for their existing bitcoin. For others it may be 80% below the price they paid. I fall into the bracket of waiting until the price is below my purchase price by 80%. I don鈥檛 actively trade and have a simple buy and hold strategy. Hence 50% moves won鈥檛 attract me to go back in. Imagine buying a limited-edition car and flipping it for 50% above what you paid. For most people that would have been considered a great investment. However, imagine the same car sales later for over 5 times its value. The world is littered with people who financed investments into limited edition assets (bitcoin included) and had to take profit early because they needed to repay a loan. Box clever and always consider your personal situation. If in doubt seek professional financial advice or avoid putting in more funds altogether.
Everything stated here is opinion and should not be considered investment advice.
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