Key Insights

  • Market dips are a regular occurrence in the crypto space and have become a normal part of many financial markets.

  • Many investors see market crashes as golden opportunities, while many fear further losses.

  • The idea behind dip buying is simple—investors get crypto at a discount.

  • Some great dip-buying strategies include dollar cost averaging and long-term holding.

  • Dip buying is not a one-size-fits-all strategy. However, it can be highly profitable if done right.


The crypto market can be a rollercoaster sometimes. At one moment, prices are soaring towards the upside.

In the next moment, they’re plunging, and many investors are devastated.

Market dips are a regular occurrence in the crypto space and have become a normal part of many financial markets.

These events have often led to the question: Is this the right time to buy?

Many investors see market crashes as golden opportunities, while many fear further losses.

That said, should you take the plunge and invest in crypto right in the middle of a market dip?

What is a Market Dip?

Market dips happen when crypto prices fall massively over a short period.

They are unlike small fluctuations and are more noticeable because of their scale.

These dips are often scarier for investors than regular fluctuations, and understanding why they happen can be very useful indeed.

So what causes market dips?

One of the biggest causes of market dips is profit-taking from investors. Typically, when prices rally strongly, many investors cash out and cause a drop in prices.

The supply of fresh coins entering the market from this activity dilutes demand, bringing prices crashing down.

Another reason for dips is market sentiment. Negative news, regulatory issues, or fear-driven selling can also create panic and drive prices lower.

Aside from these internal factors, other external ones can also play a role. For example, macroeconomic events, geopolitical tensions or even stock market movements can sometimes cause dips in crypto prices.

These dips typically come with spikes in trading volume as many investors panic and sell.

Why Do Investors Buy During a Dip?

At a glance, it seems counterintuitive to buy right in the middle of a market dip.

However, the idea behind doing this is simple—dip buying means that investors get crypto at a discount.

Many investors take advantage of the lowered prices and hope for a rebound.

As an example, Bitcoin dropped to around $3,761 in early 2020 due to market uncertainty and the covid-19 pandemic.

Investors who bought at this price saw significant gains, considering how the cryptocurrency surged to nearly $70,000 the following year.

This kind of price recovery is what attracts investors to buy during dips.

Investment Strategies for Buying During a Dip

As great as buying the dip is, it can turn out to be a major disaster if approached poorly.

One great way to buy the dip is with Dollar-Cost Averaging (DCA).

Instead of investing once, when the market could trend lower, DCA investment involves buying small amounts of crypto at regular intervals.

This removes the risk of mistiming the market and allows investors to buy dip after dip.

Long-term holding is another great strategy that investors use. This strategy involves holding on to one’s assets indefinitely, regardless of how low prices go.

Investors should note that while these strategies are highly effective, they are no guarantee for success.

Not every dip leads to a rebound, and investors must know which is which.

Risks of Buying Crypto During a Dip

Crypto dips offer opportunities, but they also come with risks.

For example, market dips could get deeper. Just because a crypto asset has fallen in price does not mean that it has hit the bottom.

Prices could continue to plummet, leading to losses if you buy too early.

Another risk with this is that market downturns could last longer than expected.

Some dips are temporary, while others are only the beginning of a long bear market. Investors who buy too soon might need to wait for longer before seeing profits.

There is also the risk of never recovering their investment if the asset loses value permanently.

Finally, investors who buy the dip are especially prone to emotional investing. Market dips can often trigger fear and panic. This could lead to impulsive decisions, and buying based on emotion can lead to losses.

How to Manage Risk When Buying in a Dip?

There are a few steps to take when attempting to increase gains and reduce risk in dip buying.

The first of these is diversification.

Instead of going all-in on a single cryptocurrency, consider spreading your investments across multiple assets.

This reduces the risk of any one asset losing value and wrecking an investor’s entire portfolio.

Another is to set investment limits.

Before buying, determine how much you’re willing to invest, and stick to that limit.

Avoid overextending yourself or investing money you can’t afford to lose.

Finally, use DCA to reduce risk. Rather than making a one-time purchase, use dollar cost averaging to buy the dup multiple  to reduce the risk of losing it all.

Overall, follow market trends and news to stay informed at all times.

Should You Buy During a Crypto Dip?

There is no one-size-fits-all answer to this question. Instead, the answer depends on your investment goals and risk tolerance.

If you believe in the long-term potential of an asset and have a good strategy in place, then buying the dip can be a smart move.

However, if you’re unsure or are investing purely on FOMO, it is best to proceed with caution.

Overall, if you’re considering investing during a dip, take your time and analyze the market.

Only invest what you can afford to lose, and approach the market with the right amount of information.