Now that the price of bitcoin has fallen significantly back below $100,000, “buy the dip” supporters are in full force.
But I'm here to offer a different perspective, which is simply: don't buy the dip.
Before I continue, let me make it clear that nothing I write in this article is investment advice.
Why would I say such a thing? Do I suddenly hate bitcoin?
No.
I have other reasons for making such a statement.
The first is that I am trying to prevent you from becoming outflow liquidity for people like this:
<blockquote class="twitter-tweet”>
Don't worry guys.
The late ones are coming. pic.twitter.com/1YL8keRHYa
— Bread Man (@BTCBreadMan) <a target="_blank" href="https://twitter.com/BTCBreadMan/status/1876833750748729546?ref_src=twsrc%5Etfw”>January 8, 2025
The second is that I like to buy bitcoins when they are actually selling at a discount, not just when they appear to be selling at a discount.
Let me explain to you.
Right now, bitcoin is trading about 13% below its all-time highs. While that may be a significant discount to an asset in the world of traditional finance, it is little more than a daily fluctuation in the world of bitcoin.
In bitcoin's four-year cycles, the price of bitcoin tends to skyrocket during the years following its halving. And then the following year tends to be pretty terrible for the bitcoin price. During that year, the price of bitcoin reaches a low, which tends to be in the range of the previous cycle's high.
That was a little confusing, so let me give you an example.
In 2022, the last “pretty terrible” year, the price of bitcoin fell to about $15,500, which was actually about $3,500 less than bitcoin's previous cycle high of $20,000.
If something comparable were to happen in 2026, we would see the price of bitcoin at approximately $53K (23% below the previous cycle's all-time high of $69K). Now, that would be a significant discount and drop worth buying.
I'm not sharing this perspective to discourage you from pursuing something like a dollar-cost averaging bitcoin investment strategy (one of the best strategies out there for the average retail investor). Instead, I share it because if a loved one came to me and asked if now was a good time to buy bitcoin, I would tell them “not really.”
I try to maximize the financial advantages (in fiat terms) of investing in bitcoin as much as possible for those who ask me about investing in it, especially those who are new to it. And while I could perhaps help someone get in and out of a bitcoin position over the next year, I don't like doing this as I encourage people to buy and hold bitcoin for the long term.
But, Frank, the United States could announce a bitcoin Strategic Reserve And other nations can follow suit! And look at all the companies that buy bitcoins for their treasuries!
Yes, these things are happening, and also things like <a target="_blank" href="https://finance.yahoo.com/news/bhutan-cashes-33-5b-bitcoin-081756733.html”>Bhutan selling bitcoins and so have things like Germany selling bitcoins and Tesla selling bitcoins.
So far, all bitcoin price cycles have been similar. So while it looks like we're in for another year of rising bitcoin price, I think we'll fall much lower than this current price level when the tables turn.
And that's when I'll buy proactively.
This article is a Carry. The opinions expressed are entirely those of the author and do not necessarily reflect those of btc Inc or bitcoin Magazine.
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