🤔What Is The Dip🤔
In cryptocurrency, the dip is defined as a sudden and sustained drop in price.This is a vague definition because whether or not a cryptocurrency is dipping really depends on its general volatility. During a bull run like the one we’re in now, it is normal for Bitcoin’s price to go up or down by 5 percent per day and go up or down by 10 percent or more on a weekly basis. For altcoins, it is normal for their prices to change by more than 10 percent per day, and they can easily gain or lose more than 20 percent of their value each week.
🔎What Causes Dips?🔎
This is important to know if you are trying to buy the dip, because looking at the price charts alone might not give you enough context to make the right call. The problem with identifying causes in crypto is that it is very rare that you can definitively point to a single factor. Usually there are multiple factors causing a dip, and each of these often cause overlapping chains of events that can turn into a vicious feedback loop.
As many of you already know, altcoins are highly correlated to Bitcoin.This is important to remember during dips because no amount of bullish news can save your altcoin if Bitcoin is in freefall. Altcoins are more volatile than Bitcoin, and this means that whenever Bitcoin dips and decimates altcoins, the profits you’ll get from buying the dip will be even larger for altcoins. This is because they will rebound much more aggressively than Bitcoin once it finishes dipping and BTC dominance returns to its downtrend.
😱How Low Will The Dip Go?😱
Again, a lot of this will depend on the factors that are causing the dip, and there is no way of knowing for sure where the bottom of the dip actually is. However, there are no shortage of tools you can use to estimate how deep a dip could get, and all of these can be found on the trading terminals of your favorite cryptocurrency exchanges. If the entire crypto market is dipping, then your main area of focus should be the BTC/USD chart even if you don’t hold any BTC. Identify levels of support on the weekly timeframe to see where it could fall.
🤑How To Buy The Dip🤑
The daily timeframe typically offers the best vantage point for buying the dip. As with the weekly timeframe, the first thing to look for is visible signs of support. The way to spot these zones of support is by looking at where prices have clustered in the past, and this is often much easier to do on the daily timeframe. When you combine the EMA, Bollinger Bands, and RSI, you should get a clear picture of whether you’re at the bottom of the dip in the short term. You can double check to make sure the dip is really over by using the MACD and trading volume. The MACD should show a trend reversal and sometimes you will spot it in the trading volume as well.
📜 Disclaimer 📜
The information contained herein is for informational purposes only. Nothing herein shall be construed to be financial legal or tax advice. The content of this video is solely the opinions of the speaker who is not a licensed financial advisor or registered investment advisor. Trading cryptocurrencies poses considerable risk of loss. The speaker does not guarantee any particular outcome.