Bitcoin - Buying the Dip vs Being a Dip
Updated
Seems like all those screaming for 60-100k now flipped to short and or buy the dip. So is this the time to buy the dip or are you simply being a Dip for Buying?
Lots of momentum implies there is likely going to be a bounce as Dips start buying what they think is a Dip but it turns out to be a bull trap.
The stock market is screaming risk off right now, but what is trending on twitter is #Buythedip. Yeah the guy that graduated High School 4 years ago is a market expert on buying the dip, but lets put some perspective on it.
Nobody runs out to the grocery store to buy 3% off their favorite item, but it amazes me that they will jump in on any blip and become a dip. I want to put some perspective on being a dip and buying dips, and this is as good as any example.
If I like something I love a deal, I wait for deals, but 3% off in the stock market is not a deal, it is a trap to buy something someone else is getting rid of. Now 10% you have my curiosity, 20% yeah I will run up to the store, 30% this is the sale I have been waiting for and want to be more aggressive buying, stock up, fill up the pantry type of buying.
So back to Bitcoin:
For many 20% is a dip worth buying, but with Bitcoin, that can often be a painful buy. Coming from the stock market and getting into cryptos in 2017 I bought the initial dip when Bitcoin pulled back 20% at 13k. Lesson learned, it is much more volatile than that and I could only sit and watch Bitcoin pullback further and further and further.
However coming from the stock market, I was wise enough to take small bites on the way down, adding at 9k, 6k, and eventually in the low 4's. I used risk management to position, not go all in as that would have really been painful and made me a weak hand.
Now I am not saying we get a 85% sale here, but 30-50% is surely within reach. What you do not want to do is put yourself in a position to be a weak hand by going too big too fast on the initial dip. IF you are building a position, small nibbles, not even a bite here as there is plenty of risk to the downside.
Once again I trimmed out a little Bitcoin last night around 49k, just a little, did not like how stocks closed, and after a 10 month run of risk on, the market appears to be screaming risk off.
Bitcoin is still a risk on trade IMO and there is clearly some room to run lower, so I am not buying this dip, I would actually be more interested in selling a little more into any retest of 50k and a short setup on the daily chart and also close out my swing trade that is still open with two targets left.
I am a buyer in the low 30's, as I love a 50% sale on anything, and whether it plays out that way or not is insignificant. My goal was always to remove my initial capital and have a nice little inventory of Bitcoin at no risk. Done!
Now I will wait as patient as a Lion in the bushes looking for the right opportunity, not forcing them here.
I want to be clear also, if you are DCA this has no effect on you, keep to the plan, if it pulls back into the low 30's add a little more than you allotted, that is an entirely different strategy, but like poker, I like to play with house money and when you are playing with house money you don't want to be aggressive, you want to be patient.
Bullish long term, but I would not be surprised to see a couple months of a correction that discourages newbies, cleans them out of their hard worked capital and sets up those patient enough to follow a plan and disciplined enough to execute a strategy for the next leg higher.
Know the difference between a Blip and a Dip, if you don't you are the latter!!!!
I do want to be clear as I stated last night when I took a trim. Bitcoin has simply become too large a weighting in my overall investments and having too many eggs in one basket is not a good idea at my age. I do not have 20 years to recover, so I would rather take a bird in the hand than 4 in the bush.
Lots of momentum implies there is likely going to be a bounce as Dips start buying what they think is a Dip but it turns out to be a bull trap.
The stock market is screaming risk off right now, but what is trending on twitter is #Buythedip. Yeah the guy that graduated High School 4 years ago is a market expert on buying the dip, but lets put some perspective on it.
Nobody runs out to the grocery store to buy 3% off their favorite item, but it amazes me that they will jump in on any blip and become a dip. I want to put some perspective on being a dip and buying dips, and this is as good as any example.
If I like something I love a deal, I wait for deals, but 3% off in the stock market is not a deal, it is a trap to buy something someone else is getting rid of. Now 10% you have my curiosity, 20% yeah I will run up to the store, 30% this is the sale I have been waiting for and want to be more aggressive buying, stock up, fill up the pantry type of buying.
So back to Bitcoin:
For many 20% is a dip worth buying, but with Bitcoin, that can often be a painful buy. Coming from the stock market and getting into cryptos in 2017 I bought the initial dip when Bitcoin pulled back 20% at 13k. Lesson learned, it is much more volatile than that and I could only sit and watch Bitcoin pullback further and further and further.
However coming from the stock market, I was wise enough to take small bites on the way down, adding at 9k, 6k, and eventually in the low 4's. I used risk management to position, not go all in as that would have really been painful and made me a weak hand.
Now I am not saying we get a 85% sale here, but 30-50% is surely within reach. What you do not want to do is put yourself in a position to be a weak hand by going too big too fast on the initial dip. IF you are building a position, small nibbles, not even a bite here as there is plenty of risk to the downside.
Once again I trimmed out a little Bitcoin last night around 49k, just a little, did not like how stocks closed, and after a 10 month run of risk on, the market appears to be screaming risk off.
Bitcoin is still a risk on trade IMO and there is clearly some room to run lower, so I am not buying this dip, I would actually be more interested in selling a little more into any retest of 50k and a short setup on the daily chart and also close out my swing trade that is still open with two targets left.
I am a buyer in the low 30's, as I love a 50% sale on anything, and whether it plays out that way or not is insignificant. My goal was always to remove my initial capital and have a nice little inventory of Bitcoin at no risk. Done!
Now I will wait as patient as a Lion in the bushes looking for the right opportunity, not forcing them here.
I want to be clear also, if you are DCA this has no effect on you, keep to the plan, if it pulls back into the low 30's add a little more than you allotted, that is an entirely different strategy, but like poker, I like to play with house money and when you are playing with house money you don't want to be aggressive, you want to be patient.
Bullish long term, but I would not be surprised to see a couple months of a correction that discourages newbies, cleans them out of their hard worked capital and sets up those patient enough to follow a plan and disciplined enough to execute a strategy for the next leg higher.
Know the difference between a Blip and a Dip, if you don't you are the latter!!!!
I do want to be clear as I stated last night when I took a trim. Bitcoin has simply become too large a weighting in my overall investments and having too many eggs in one basket is not a good idea at my age. I do not have 20 years to recover, so I would rather take a bird in the hand than 4 in the bush.
Note
I love how many took offense to my "high school grad" comment. Let me put it this way. Do you take your Lambo you bought with your GME winnings to a mechanic that just graduated mechanic's school, or to Luigi who has been working on Lambos for 20 years? When you need heart surgery, do you trust the Doctor just out of med school or the Doctor doing heart surgery for 15 years? Obviously many have never applied for a job, because normally the first thing they ask is WHATS YOUR EXPERIENCE!!!! Which is more important? That you graduated with a 4.0 or you have 10 years of experience? Good book on hiring "smart people", read Deming's Management Theory.Note
One more thing and I will leave it at that. If you invested 50k in Bitcoin and it is now worth 600k that your actions are going to be different than someone that is DCA into a long term position. It is also different if you are 22 years old vs someone that is 55 years old. There are so many variables it is impossible to include them all as a one size fits article. To be crystal clear I am bullish long term. People think they are in control, they can't lose, but do NOT confuse a bull market with being a genius. Unless you are 40 or older, you likely have not seen a bear market, and I'm not talking about the correction last year, I'm talking about a 12-24 month bear market, like 2000 and 2009.
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