As the price of bitcoin has plummeted significantly below $100k once again, the “buy the dip” enthusiasts are out in full swing.
However, I am here to present an alternative viewpoint, which is simply: Avoid purchasing the dip.
Before I proceed, let me clarify that nothing in this piece constitutes investment guidance.
Why would I express such a notion? Have I suddenly developed a dislike for bitcoin?
No.
I have different motivations for voicing this opinion.
The first is that I aim to prevent you from becoming exit liquidity for individuals like this:
Don’t worry guys.
The retards are coming. pic.twitter.com/1YL8keRHYa
— Breadman (@BTCBreadMan) January 8, 2025
The second reason is that I prefer to acquire bitcoin when it’s genuinely available at a discount rather than merely when it seems to be.
Let me elaborate.
Currently, bitcoin is trading about 13% lower than its all-time highs. While this may represent a substantial discount in the realm of conventional finance, it’s hardly more than a daily variation in the bitcoin market.
In the four-year bitcoin cycles, the price of bitcoin typically soars during the years of and following its halving. Conversely, the subsequent year generally tends to be quite unfavorable for bitcoin’s valuation. During that year, bitcoin’s price reaches a low, often corresponding to the previous cycle’s peak.
This explanation may seem a bit convoluted, so let me provide an illustration.
In 2022, the last “quite unfavorable” year, bitcoin’s price plunged to around $15,500, which was actually about $3,500 below bitcoin’s peak from the earlier cycle — $20,000.
If a similar situation occurred in 2026, we would observe bitcoin’s price at roughly $53k (23% lower than the prior cycle’s peak of $69k). That would represent a true discount and a dip worth purchasing.
I do not present this viewpoint to discourage you from engaging in a dollar-cost averaging strategy for bitcoin investments (which is one of the most effective strategies for average retail investors). Instead, I share it because if a loved one approached me and inquired whether it was a good moment to buy bitcoin, I would respond “not really.”
I strive to maximize the financial benefits (in fiat terms) of bitcoin investments for those seeking advice — particularly newcomers to the space. And while I could potentially assist someone in trading in and out of a bitcoin position over the next year, I prefer not to do so, as I advocate for individuals to buy and hold bitcoin for the long term.
But, Frank, the U.S. may unveil a Strategic Bitcoin Reserve and other countries might follow suit! And look at all the companies acquiring bitcoin for their reserves!
Indeed, these events are occurring, as evidenced by instances like Bhutan cashing out bitcoin, along with occurrences such as Germany liquidating bitcoin and Tesla divesting bitcoin.
Thus far, all bitcoin pricing cycles have exhibited similarities. Therefore, while it appears we may have another year of appreciating bitcoin prices ahead, I anticipate that we will drop much lower than the current price point when the circumstances shift.
And that will be my opportunity to buy actively.
This article is a Take. The views expressed are solely those of the author and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.