Buy The Dip

One of the most common strategies in Bitcoin — and one of the least successful in practice — is selling with the intention of buying back cheaper.

“I’ll sell here, wait for it to drop, and buy back at a lower price.” It sounds rational. In a predictable market, it might even work.

Bitcoin isn’t predictable in the short term. And the strategy fails for a specific, observable reason: the dip, when it comes, feels much worse than expected.

Here’s what actually happens. Someone sells at, say, $80,000. Bitcoin falls to $60,000. The news is negative. The fall has validated their decision to sell. But now — at $60,000 — buying back feels dangerous. What if it falls to $40,000? What if this really is the end? The same logic that said “sell and rebuy cheaper” now says “wait a little longer.”

Bitcoin falls to $50,000. Now buying back feels even scarier. The news is worse. Friends are panicking. The original thesis — sell high, buy low — has been overwhelmed by the emotion of the moment.

And then Bitcoin recovers. It hits $70,000. They missed the bottom. Now buying back means paying almost as much as they sold for, with nothing to show for the trade except months of anxiety.

This pattern plays out so consistently that experienced holders treat “I’ll buy back cheaper” with significant scepticism. Not because dips don’t happen — they do — but because the psychology of buying during a dip is far harder than the strategy sounds in advance.

Tomorrow: the sunk cost trap — holding Bitcoin for the wrong reasons.

— The Daily Bit