Should You Have Bought During Bitcoin Bubble Burst – Why Buy The Dip?

Well, it finally happened – the so-called Bitcoin Bubble finally burst, as the cryptocurrency’s valuation went from a nearly $20,000 per coin high to a free-falling $11,000 and change. A Some of that value has since recovered, making the “bubble burst” much more of a correction than anything else, but many pundits are using the event as an excuse to point fingers and say “I told you so” when it comes to trusting Bitcoin as an investment asset.

On some level there’s some truth there – price drops like the one just experienced are often enough to send newbie investors into paroxysms of fright, triggering a mass sell-off to preserve as much value as possible. Still others will see what they think is the writing on the wall and get out while the going is good, swearing off the high-risk nature of cryptocurrency markets. Meanwhile, anyone with an eye to long-term growth welcomed the Bitcoin Bubble – it was the perfect opportunity to buy more while the price was low.

It’s considered rather universal that the price of Bitcoin has been and will continue to be quite unstable. This makes analysts’ jobs harder, as trying to predict any crypto market is a crap shoot – the bubble burst and bounce, where Bitcoin hit a massive low just to recover to a high of around $15,000 is proof of that.

Many analysts, instead of referring to Bitcoin’s volatility, term it “elasticity” in that it bounces high and wide. Large price dips and massive upswings have become the cryptocurrency’s calling card – and that means there’s still lots of life left in Bitcoin even in the wake of the bubble burst.

Here’s Why Buying During Price Drops Is Smart

Bitcoin is all about long-term value. Investors need to keep aware of this fact. While many see the volatility of cryptocurrency markets and imagine the kind of short-term profit opportunities that traditional day trading can muster, benefiting from Bitcoin’s value has always been a long game – and price drops make it much more affordable to build your Bitcoin balance at a fraction of the cost when prices are high.

Thankfully, Bitcoin’s elasticity means that you’ll be able to benefit from this in the future. This might have been the biggest correction in recent memory, but Bitcoin’s going to bounce repeatedly in the future. If you want to harness Bitcoin’s disruptive ability when it comes to personal finance, here’s why you should be cashing in – and not checking out – every time the price plummets.

1. Buy More For Less

Digital currency investors love buying more crypto assets for less during price drops. The strategy of the day is dollar-cost averaging – simply put, it lets traders and investors purchase a set amount of a specific asset every week or every month no matter the market price at the time.

When all’s said and done, traders could get more of a digital coin during a price drop – and less of the same coin when the price rises, all while spending the same amount of fiat cash. This makes the current price drop the best time to load up on a Bitcoin investment.

2. A One-Time Only Deal

While dollar-cost averaging is obviously going to play out in your favor, buying more Bitcoin now while the price is low is also a great opportunity to set yourself up for long-term growth. A big bubble is likely to be a one-time only event; there will be more fluctuations in the future, but unlikely any as dramatic.

This means that if you aren’t going to be watching your investment like a hawk – you just want to “set it and forget it” like a long-term investment – you can benefit from Bitcoin’s unerring ability to increase in value over time.

3. Huge Future Growth Potential

Let’s be honest here, the naysayers have been wrong much more than they’ve been right about Bitcoin. Each time the price drops people might come out of the woodwork to say that cryptocurrency’s sky is falling, yet historic price data gives that statement the lie: moments of Bitcoin bottoming out have seen even larger booms again and again – and some even say that, this latest bubble burst notwithstanding, Bitcoin could hit $50,000 a coin just 12 months after the date of the last, most recent correction.

As volatile and exciting as Bitcoin is, treating it like any other investment is really the way to go. Yes, you can make massive amounts of money if you’re lucky, but caution and diversification are key – we’re talking long-haul investment strategies here.

So Why Did the Bubble Burst So Bad Anyway?

Everyone has a pet theory as to why Bitcoin dropped so precipitously and crushed the dreams of so many would-be crypto investors. Yes, it’s true that the cryptocurrency’s market value declined by nearly 30 percent, but it’s also true that there are signs of continued upswings – and these signs have had people speculating like crazy.

Here’s just three reasons why Bitcoin dropped so much value in such a hurry:

1. ‘Tis the Season

December is a rough time of year for many investments. The festive season sees investors wanting to get their mitts on their annual gains, exchanging crypto assets for fiat cash in order to do things such as holiday shopping or booking family trips.

While there are plenty of places where you can shop with Bitcoin online, market penetration isn’t that deep – fiat cash is still king right now. Enough investors pulling out larger amounts of assets all at once can certainly be a contributing factor to a price drop..

2. The Ballad of Bitcoin Cash

Coinbase, the big daddy of online digital wallets, went live with its support for Bitcoin Cash, the highly controversial cryptocurrency that hardforked off the main Bitcoin blockchain in 2017.

A split of this nature could certainly have contributed to uneasiness and price fluctuations as competing camps of crypto enthusiasts attempted to duke out which of the digital assets would reign supreme – Bitcoin Cash, while still light-years behind Bitcoin’s valuation, has been experiencing a surge, and this could be from BTC adherents switching to BCH.

3. Not Enough Cooks in the Kitchen

Despite Bitcoin’s original intention to be a democratizing force in finance, there’s certainly little that’s decentralized about this cryptocurrency right now. Bloomberg recently pointed out that around 40 percent of all circulating Bitcoin is owned by a group of around 1000 investors – and with this much centralized power and control, it’s easy to conduct some arbitrary price-fixing shenanigans.

There could have been a cadre of investors pumping the price high, dumping Bitcoin to drive the price low, and then re-purchasing at the low point to increase the overall value of their investment. Is there proof of this? Of course not. Will that stop the conspiracy theorists from suggesting it? Your guess is as good as ours.

Bitcoin Bubble Burst Wrap-Up

Are you spooked by the Bubble Burst? You shouldn’t be. Trust in the power of cryptocurrency – and the historic ability of Bitcoin to be more elastic than a rubber band. Don’t bail out just yet, even if you feel as if you’re losing out. Instead, invest more now and reap the rewards by next week, next month, or next year.