Buying the dip feels smart to most and even easy too, price goes down, get a better deal. It's an easy way to do a little math and add value to your portfolio. Pretty much everyone that's a serious crypto investor has bought the dip at least once.
That being said, buying the dip does work when there is room for recovery, when there isn’t and the investment is simply a non existent investment opportunity, it doesn’t do much good. A great example of this was the drop in the price of bitcoin back down from $60,000 to around $30,000 in 2021 and how those people who bought in around $35,000 were eventually rewarded for doing it. If you were the person that bought at $80, at $40 and again at $10 for the same Luna token, you may see nothing for your $130 investment.
My theory or my cautiousness is that when to stop buying the dip is based on whether the project itself is broken, that is to say there’s no longer a desire or use case for the project, and not based solely on price. Some of the cases could include having no development, dysfunctional tokenomics or case of security breach or some other regulatory issue which changes at the fundamental level how the project was being valued.
Buying the dip was also a misconception or a mislabel as the dip was simply what the market was finally pricing to show reality.
In most crypto price cases, you don’t know until after the fact what the circumstances were leading you to having bought the dip. This can be so disappointing when you are watching others average down on coins that they purchased at such an extraordinary discount and all through their averages of paying less than the price they initially paid for those coins.
The bottom line with buying the dip is that you will be able to buy the dip successfully until you cannot and since there isn’t anyone who can tell you that the current dip will work for you until after the end results of the price shows, you’ll need to do a little more than look for price on charts and hope for some gains.
