Buying the dips in crypto: Bitcoin, Ethereum etc.

Is it really possible to buy dips? Can you manage to buy Bitcoin and Ethereum right at the bottom?

It is possible to hear these voices all over the Cryptosphere: “Are you gonna buy the dips? Buying the dips? Buy the dips! Did you buy the dips?” It’s fine to buy at the cheapest possible price, of course, but who really knows when the price is at the lowest possible price at that very moment? The correct answer to this question is: Nobody knows. Absolutely.

As traders, we want to buy low and sell high. To do this, we try to predict when the price is the cheapest and most expensive (in a given time range). In order to understand whether the price is at the bottom, it is necessary to examine many indicators. Let’s take a look at what these could be.

Is the past a mirror of the future? Maybe some kind of…

First of all, it is necessary to take a look at the price movements in the past. This is not because price movements will unconditionally repeat the past. Past resistance and support levels leave lasting marks on the minds of market players (and computers). Therefore, what is happening today is seriously affected by events in the past.

Bitcoin had a hard time getting past the $42,000 mark last year.

Bitcoin has repeatedly found support around $30,000 in the past year.

Bitcoin turned down from $65,000 – $67,000 – $69,000 levels.

This data written to the memories in the past is used by everyone to try to predict what will happen today. Although the levels in the past are not exactly decisive for today, they definitely affect the decisions made. Do not think that the same movements will be repeated. Imagine that today’s decisions will be made by traders who have experienced these events in the past.

Bitcoin graph on the mirror
Who said that even if the past is a mirror of the future it is a flat mirror that reflects everything as it is

Price is useless without volume

It is necessary to look carefully at the trading volume, both when examining the past and watching what is happening today. It’s totally different to see the price going up to a level for a very short time and a high volume of trading at that level. In particular, when looking at the past, we should carefully examine how much trading volume is at significant levels, which we can call milestones, and how much trading volume is in trend reversals.

Volume profile view
Volume profile view

In the chart above, we see that the trading volume for the last 150 days is focused around $47,200. It is also immediately apparent that the Bitcoin price has spent a lot of time at these levels in the past months. From here, we can simply deduce: One day, when Bitcoin reaches these levels again, it will have difficulty in going up. Retrospective algorithms and traders will always keep in mind the possibility that the price will be rejected at these levels and will make their trading decisions accordingly. When these levels are passed, it is not difficult to predict that the movement will accelerate. Additionally, they will be watching carefully how fast Bitcoin will surpass these levels if it moves upwards in the future.

Watch out for global events

The changes that the Fed plans to make in the interest level are critical for crypto markets, as in all financial markets. The US Federal Reserve (Fed) Chairman Jerome Powell’s announcement that they are considering raising interest rates in March 2022 concerns all traders. The rise in the interest rate undoubtedly means that the money dispersed in many different markets is called back to the banks. Therefore, many markets, which are thought to experience money outflow in case of an interest rate hike, are negatively affected by such news.

Conclusion

It will never be possible to be sure whether we have reached the bottom. It would be misleading for anyone to express opinions based on ungrounded estimates. Instead, it is necessary to make buying and selling decisions by paying attention to the points I mentioned above. Trade responsibly!

author avatar
Dean J. Driessen
Coin Push Crypto Signals is a useful mobile app for crypto traders, can be installed from both Google Play Store and Apple App Store.