Cryptocurrencies

Buy the dip, is that a good investment strategy for crypto?


The past month has been the price of cryptocurrency Worldcoin down by 30%. These types of price drops are not necessarily exceptional in the crypto world, and often provoke the cry ‘buy the dip’.

But is this bold investment strategy wise, and how does it compare to dollar-cost averaging (DCA)?

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What does buy the dip mean?

Buy the dip is not about chocolate or disco dip on your ice cream, but means that you buy crypto after a significant price drop. The idea behind this strategy is that the price will rise again in the long term, so that you can now benefit from a lower value.

That is of course a gamble, buy the dip is not without risks. After all, the price could fall further, leaving you with a loss.

That’s why dollar-cost averaging a perhaps wiser option for many investors. With DCA you periodically invest a fixed amount, regardless of the rate. This way you automatically buy more coins when the price is low, and fewer when the price is high. This average purchase point reduces the risk of major losses.

Combination DCA and buy the dip

Yet there is no one-size-fits-all strategy for everyone. DCA spreads your investments over time, so you benefit less from individual price drops. Buy the dip can therefore also be a good addition to DCA, as long as you keep some liquidity on hand.

By combining both strategies, you can increase your chances of winning in the long term while limiting risks.

Also keep an eye on the news

Worldcoin’s recent decline may be due to the fact that the project is in different countries forbidden is. This has led to uncertainty about the future of the currency, which is reflected in the falling price.

Furthermore, all AI cryptos are currently experiencing a downtrend, which may have amplified Worldcoin’s decline.

If you want to buy the dip, do research into what is currently happening in the news and estimate whether the price can rise again.

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