As People Sell in a FUD Induced Panic; Consider Buying the Dips

The FUD has been piling up, and it is likely most cryptocurrencies will see some lower prices. It may seem counter intuitive, but times like this are when you might want to buy the dips.

What I mean is this:

People tend to want to buy when prices are going up. They see Bitcoin, or another crypto, break all time highs. They think, “I better buy before I miss out!” This is called FOMO. This is an emotional response that sometimes results in people buying high. When people get FOMO, I say, “if you buy now, average in, otherwise, wait for the dip.”

Meanwhile, people tend to want to sell when prices are going down. They see big sell orders chew through the order books and see support levels blown past and think, “I better sell before I lose more money!” This is essentially the opposite of FOMO. This is an emotional response that sometimes results in people selling low. When people get in this mode, I say, “if you sell now, average out, otherwise, buy and wait for the recovery…. ’twas this not the dip we were waiting for?”

In investing in general, you want to buy low and sell high. This is especially true in the volatile crypto space.

Thus, while your emotions will tell you to buy when the price has gone up a lot and sell when it has been on a bearish path, a better long term strategy is often to buy on the way down and then to sell on the way up. Even if buying on the way down means building an average position in a coin that keeps going lower and selling on the way up means waiting weeks or months (or in those worst of times, years) and then recouping some costs before turning a profit. Essentially, the best strategy is often a sightly uncomfortable and counter intuitive one (especially if your intention is to ride the wave not not just to make money in the short term; although even then, you are watching indicators to find the bounce).

Right now there has been a ton of FUD piling up. See this list of FUD that caused the current bear market via that last link. Then see this Tether FUD that really isn’t helping. Things are not great right now, and there is a good chance they will get bad before they get worse.

Still, bad and worse are likely temporary moods. The long term trajectory of crypto is arguably still bullish and there is a real possibility that cryptocurrency will be with us for years to come. If you want to be in for the next wave, you either have to try to time the bottom, buy on the way back up, or buy the dips and hold. The only one of those strategies that ensures you won’t miss out is buying the dips and holding.

No one can tell you what the right move is… but buying in the $7ks to $9ks and riding back up to $20k (for example) is generally going to feel a lot better than passing up the dip and getting FOMO at $20k. That is just basic logic. Of course, prices can always gone down and that is why you want to avoid over extending and make sure you are ready to buy to whatever price occurs. Check out tradingview.com to get a sense of what might happen next.