Bitcoin Dips Explained in a Bull Market

A common thought process by many new bitcoiners is as follows, “I will wait for the next dip to buy some more corn”. Sadly, this all too often leaves these people with less bitcoin. They set a limit order at 20k while bitcoin is sitting comfortably at 23k, then they wait for the dip. However, in bull markets, these people almost always get burned out. I can recall hundreds of times I have done this and lost out big. The reason for this is a lack of understanding regarding bitcoins price movements, and it can take a while to begin to understand it.

However, this has been programed into people’s heads about bitcoin. Prior bull runs have shown extreme volatility and crazy price movements. Look at the 2017 run; when bitcoin went to 20k then drew down almost 80% to 3k. People still think this is how bitcoin works, especially when they scream “bitcoin is a volatile asset, its all speculation!”. I am here to tell you why this argument is a fallacy.

This bull run may prove to be far different from previous ones, and it makes perfect sense as to why that is. Intuitions and retail have never shown this must interest in bitcoin before. Confidence has never been so high in the gold 2.0 narrative. Never has it been so important to expose your portfolio to bitcoin (you all know why from my past write ups). But what does this have to do with price volatility? It has everything to do with price volatility.

Examine this chart since bitcoin breached 10k.

What does this tell me? It tells me that bitcoins volatility is not what it used to be, and how it is unfair to continue to critique bitcoin regarding its on that matter. Bitcoins dips have been smaller and smaller compared to the other bull runs. Bitcoin used to see 30% corrections during bull runs. We haven’t even seen a 20% correction yet. But that doesn’t mean they won’t happen. Most likely they will be smaller and smaller as this market continues. Maybe more in the range of 10%-20% corrections.

Look at this chart now (below). This is how you should view bitcoins price movements. Bitcoins overall bull trend is strong, it will continue to achieve higher highs. It will also achieve higher lows. Right now, imagine if bitcoin corrected from 32k to 22k. Well not even a month ago 20k was an insane new high for bitcoin. The chart would reflect a similar image to the one above. This is what we will continue to see, so do not fear dips!

Now look at this chart

This chart shows the amount of bitcoin being withdraw from wallets on exchanges. It shows people taking their bitcoin off exchanges (for selling) and sending it where they can hold it (private wallets where they plan to hold their bitcoin, not sell it). Meaning sellers for bitcoin are running out and bitcoins supply is running scarce. Simple supply and demand.

Here is another factor; dips are being bought up like crazy. Right now go look at a bitcoin chart since we breached 20k. Notice how every small little dip is bought up, driving the price higher and higher. Silent big buyers (institutions and people with lots of money) are the people buying these dips. They are rushing into bitcoin to get exposure in order to protect their wealth. For every single MicroStrategy (the company that bought 80,000 BTC) there are a bunch of silent buyers who don’t want to announce they are buying bitcoin so the price doesn’t pump.

If this trend continues, which it most likely will, bitcoins corrections will become more and more minor. Of course, nothing can continually go up day in and day out without correcting. However, no asset has ever been this needed, nor is any other asset like bitcoin. Stop looking at bitcoin like a stock, because its far from that. Bitcoin is supply and demand economics.

Don’t let the fear of a dip prevent you from buying. Continue to dollar cost average, buying small increments over a period of time but often, and you will continue to make profit.