What does "buy the dip" mean?

Question

I keep hearing "buy the dip" constantly with Bitcoin people/comments.

I get that it means that you should buy Bitcoin while the price is temporarily low, but what do they mean by it? Do they assume that people have a bunch of money just sitting around waiting to be spent? If they have the ability to buy Bitcoin, and they have money, why would they not have already done so, and thus have no money to spare?

Am I just unique in that I don't have any massive streams of income constantly flowing into my bank account for me to "buy the dip"? For me to afford a single small purchase on Bisq, I'd need about $500, which translates to several full months of me saving all the money I don't absolutely need. To buy a little BTC once. And then my bank account is drained again, and I have to start over saving for months to make another such minor purchase.

What do they mean by "buying the dip"? Do people normally have enormous amounts of money piled up just "waiting for the right time to invest"? Are they deliberately acting arrogantly as to pretend that they are super rich and assume that everyone else also is? Do they genuinely not understand that others aren't as super-rich as they are? I don't understand it.

Answer 1

I get that it means that you should buy Bitcoin while the price is temporarily low, but what do they mean by it? Do they assume that people have a bunch of money just sitting around waiting to be spent?

If you hold a lot of cryptocurrency and have a balanced portfolio, that will mean a lot of low risk holdings. That might not be cash, but it's likely to be things that can easily be exchanged for cash.

If they have the ability to buy Bitcoin, and they have money, why would they not have already done so, and thus have no money to spare?

That would mean that you cannot profit from drops in price. Since bitcoin is a very volatile asset, why would you want to deprive yourself of the ability to profit from its drops in price?

For example, one very simple "buy the dip" trading strategy is to keep a pile of cash equal in size to your pile of bitcoin. This means that you buy bitcoin when it goes down and sell it when it goes up. This allows you to profit from rises and drops in the price of bitcoin even if it returns to a price it previously held. You can't do that if you buy and hold.

Am I just unique in that I don't have any massive streams of income constantly flowing into my bank account for me to "buy the dip"?

You're probably not unique, but you're also not a trader. "Buy the dip" is a trading strategy.

Another "buy the dip" strategy would be to sell stock and buy bitcoin after a 20% drop in the price of bitcoin. This doesn't require you to have huge piles of cash around.

Answer 2

You're spot on!

I don't have enormous gobs of cash sitting around (who does?!) but as I get paid monthly I have some sitting ready for bills or going out next week. Buy the Dip - or more bluntly - Buy the F'ing Dip (BTFD) - is a reminder that:

• The dip will be temporary
• Don't later regret that you didn't buy
• Consider buying a dip IF YOU ARE ABLE TO

Interesting commentary from Dr Adam Back talking with Preston Pysh and PlanB on Preston's podcast recently; accepted experience/wisdom was to ignore dips below 20% - that is a "dip" of 10% wasn't even worth the definition of "dip". Larger dips of 20%+ are therefor worth buying if you're able.

For me, I dollar cost average with a daily buy so I don't really watch the price - some days I get more sats, some days I get less sats, but at the end of every day I have more sats than yesterday.

Over the long term bitcoin will rise in value, and therefore I've protected my savings (future purchasing power). It's that simple. I'm not a trader. I don't have great gobs of cash sitting around. Work in a job and earn living, pay my bills, and save in bitcoin.

Do what you're able. :-)

PS - During the 2017 bull market there were about half a dozen dips of 30%; this dip is the first half decent one so far. aka: this is normal for bitcoin.