Is “Buy the Dip” Strategy Still Viable?
There’s no denying that the current state of the cryptocurrency market appears to be in a downward spiral, with several leading cryptocurrencies experiencing declines of 40% or more this year. Bitcoin (BTC), often dubbed “digital gold,” has seen a 20% drop from its peak value recorded in January. As the market continues to tumble, many investors in the crypto space are left questioning their next steps. Is this a rare opportunity to purchase cryptocurrencies at reduced prices, or is it a signal to sell before further declines occur? Let’s delve deeper into the situation.
The Case for Buying the Dip
Historically, the “buy the dip” approach has proven effective, leading many long-term crypto investors to believe it will yield positive results once more. The strategy is straightforward: when a cryptocurrency on your radar declines by a predetermined percentage (usually between 10% and 20%), you buy it at a lower price. This tactic tends to be most successful when the overall market trend for that asset is ascending. Take Bitcoin as a prime example; known for its extreme price fluctuations, both upward and downward, it has shown a long-term upward trajectory, making it a favored choice for this strategy over the years.
Looking back at a significant market correction, in November 2021, Bitcoin reached an all-time high of $69,000, only to face a staggering 65% decline by November 2022, dropping below $16,000. Those who seized the opportunity to purchase Bitcoin at these discounted prices have since reaped rewards, as it now trades at around $85,000. While it hasn’t yet crossed the $100,000 threshold, it has fully regained losses incurred during the 2022 market downturn. Additionally, Bitcoin now benefits from the backing of a pro-crypto administration, which seeks to position the U.S. as a “Bitcoin superpower” and “crypto capital of the world,” introducing initiatives like a Strategic Bitcoin Reserve and favorable regulatory conditions for the cryptocurrency sector.
The Argument Against Buying the Dip
Conversely, there are strong voices among Bitcoin skeptics who argue against the “buy the dip” approach. These critics believe that the efforts to push Bitcoin back to the $100,000 mark by 2025 are unrealistic. They cite a combination of international tariffs, sluggish domestic economic growth, and a staggering $36 trillion national debt as insurmountable obstacles for Bitcoin’s ascent. As a result, a trend has emerged where funds are flowing out of Bitcoin and into safer assets like gold, reflecting what analysts describe as a “risk-off” mentality among investors. This mindset has led many to minimize their exposure to the volatile cryptocurrency market.
Furthermore, those who advise against buying the dip express skepticism about the pro-crypto policies of the current administration. They view initiatives like the Strategic Bitcoin Reserve as little more than empty promises, as such measures do not entail actual government purchases of new Bitcoin but rather involve reallocating existing Bitcoin from various government departments to the U.S. Treasury for centralized storage.
Which Cryptocurrencies Are Worth Buying?
It is crucial to note that not all cryptocurrencies merit a purchase during a market dip. Take meme coins, for instance. Cathie Wood of Ark Invest has pointed out that many of these assets are likely to plummet to zero, making them poor candidates for investment during downturns. For example, Dogecoin (DOGE), which has seen a 45% decrease in 2025, is not a sound choice for buying the dip.
The situation becomes more complex when considering Ethereum (ETH), which has faced a nearly 40% decline this year. Traditionally, Ethereum has been a solid option for the “buy the dip” strategy, given its long-term price growth over the past decade. However, it currently trades at close to 60% below its all-time high from November 2021 and has struggled to recover from the crypto winter that hit in 2022. Therefore, it does not meet the criteria for my list of potential “buy the dip” candidates.
For the time being, I am focusing my investment strategy on cryptocurrencies with market capitalizations exceeding $5 billion, those that have declined less than 25% in the past year, and those that recently achieved all-time highs in January 2025. This analysis leaves me with only two candidates: Bitcoin and Solana (SOL). Both have recently suffered due to broader economic weaknesses but are expected to bounce back once the current volatility subsides.
