World events have had a major impact on crypto prices recently. There are many reasons why Bitcoin, Ethereum, and Solana should be going up right now, but the Russian invasion and the unpredictability of Putin’s next moves has stock and crypto investors alike shaky.
If you were gifted 100k in cash right now? Where would you put it? If you put it in savings you are losing buying power based on rising inflation. CD’s are garbage. The stock market may have some steals, but we know that stocks are quirky in war time. Stocks had already begun a correction, but they were likely not finished with that correction, even before the war in Ukraine broke out. World events may even push stocks much lower over the coming weeks or months. That leaves real estate, precious metals, and crypto. Real estate is often a great investment, but with the predicted rise in interest rates, real estate may see a setback soon. Precious metals? Well, those have risen recently and likely will rise more. You could invest in an exchange traded fund like SLV or GDX or you could nab some bullion. Yet, how high can metals really go? And like I said, you they have risen recently, so you wouldn't be buying a dip.
It is fun to think about how you might spend or invest money that you do not have. We have all imagined winning Mega Millions or inheriting a massive amount of money from a mysterious relative. Back to the real world, we have to pinch ourselves and decide what we will do with what we actually have, regardless of how little or how much that may be. We also have to think long-term. I am in the 2nd year of a 5 year plan for savings.
I personally like to put around 33% of “new savings money” into crypto during a 10% or more dip. I generally stick with the blue chips. I have that much confidence in the future of crypto. World events will constantly change, but the movement towards decentralized finance is not a fad. Smart investors looks for calamities, bad news, and other negative influencers on markets so that they can take advantage of opportunities. (It should go without saying, but I will say it anyway, do not invest in anything that comes with risk, what you cannot afford to lose).
So, what if you buy the dip and it continues to dip? First of all, don’t panic. Second of all, consider buying more to lower your holding average. Thirdly, hold patiently. Eventually, the bear market should turn bull and look more like the chart below: Even then you can buy the dips and sell peaks. If you are not good at studying candlesticks and charts, follow people who are. You can also try the strategy of percentages--like buying at 10% dips or selling at 10% gains.
I am in a large whale NFT private chat and I constantly see them saying, “buy the dip,” or “buy now to lower your average entry point.” Most of these guys have made hundreds of thousands if not millions on cryptocurrencies and NFTs. They know what they are doing. Most of them also started with a nice cushion and could afford to take risks. One of them, with whom I have become friends, started with very little and made big money by getting in on Bored Apes really early. He still owns two. Lucky guy. (On a side note, buying the dip on NFTs is a different level of risk. You also have to be careful to not start buying dips on a garbage project or you will just add to your losses).
The point is, when I see these dips, if I have free money, I try to increase my holdings. When the market goes on a run, I try to move a little over to stable coins. I don’t usually time it perfectly. I study charts, but there are always variables that are difficult to predict; however, this system has been working for me. Perhaps it will for you, but as always, DYOR and invest at your own risk!
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