Our weekly crypto derivatives analytics report delves into macro events; the current state of crypto and trading signals from spot trading volume; and futures, options and perpetual contracts.

In the past week, cryptocurrencies have surged as optimism grows that the US-China trade war may be easing. Following two days of talks, the US announced a 90-day tariff reduction on Chinese goods from 145% to 30%. ETH has been the biggest winner among the top 10 tokens, rising 40% in a week, though this has led to significant changes in implied volatility. BTC regained $100K for the first time since early February, with positive bias in OTM call skews, but its volatility market remains weak compared to ETH.

Please check out the report’s highlights.

Open interest for ETH surged by $900M over the past week, coinciding with a 40% rise in its spot price. This increase followed US-China trade negotiations, leading to a temporary 30% tariff reduction on Chinese goods. On May 12, 2025, after US Secretary of the Treasury Scott Bessent confirmed the agreement, open interest and perpetual trading volumes hit monthly highs of $9B and $23B, respectively. While open interest has stabilized, trading volumes declined after peaking during a brief pause in the crypto rally between May 11 and 12, 2025.

BTC volatility smiles suggest risk-on sentiment

Despite low short-term volatility expectations, BTC's short-tenor smiles indicate a continued risk-on sentiment, with a 5% skew toward out-of-the-money calls. Early in the week, put option volume surpassed $200M, outpacing $140M for calls, while open interest remains higher for puts than calls.

ETH has outperformed BTC for the second consecutive week, achieving a remarkable 59% return over the past month. This rally came with volatility: ETH's front-end volatility briefly doubled BTC’s 7-day tenor, leading to an inverted term structure. By Monday, ETH had pulled back some gains, causing front-end volatility to drop swiftly, a faster resolution than seen in previous inversions.

However, another rise in spot price toward $2.6K reignited volatility expectations. Open interest and options trading for ETH remain skewed toward calls, with volumes exceeding $150M on May 13, 2025, coinciding with a second price surge after a brief retreat on May 12, 2025.

Advanced

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Bybit X Block Scholes crypto derivatives analytics report (May 14, 2025): BTC volatility remains weak relative to ETH

Strategic Bitcoin reserve (SBR): Established on March 6, 2025, integrating Bitcoin into national reserves

Strategic Bitcoin reserve hopes are all the rage

On March 6, 2025, US President Donald Trump signed an executive order to establish the nation's first strategic Bitcoin reserve (SBR). This pivotal initiative positions Bitcoin alongside traditional reserves like gold and oil, signaling a significant endorsement of digital assets by the federal government. The SBR aims to centralize and manage all Bitcoin acquired through legal forfeitures, ensuring these assets serve as long-term strategic holdings rather than being sold off.

The creation of the SBR reflects Trump's broader vision of making the US a global leader in cryptocurrency. By integrating Bitcoin into national reserves, the administration seeks to harness the benefits of digital currencies while providing a hedge against economic turbulence. This strategic move has also spurred state-level policies, as seen in New Hampshire, where legislation was recently passed allowing state investments in cryptocurrencies and precious metals. Such developments indicate a growing trend of governmental adoption of digital assets, reinforcing the legitimacy of cryptocurrencies in the financial landscape.

Institutional accumulation drives down Bitcoin availability

In the private sector, institutional investors are increasingly accumulating Bitcoin. Companies like Strategy (formerly MicroStrategy) have expanded their holdings significantly, purchasing an additional 13,390 BTC for $1.34 billion, which brings their total to 568,840 BTC. Similarly, Metaplanet Inc. invested $126 million to acquire 1,241 BTC, surpassing the national Bitcoin holdings of some countries. This trend highlights a shift in Bitcoin ownership, with retail investors often taking profits during market rallies, leading to a redistribution of Bitcoin toward institutional entities.

As of May 13, 2025, over 19.86 million BTC have been mined. Wallets holding at least 100 BTC account for 60.84% of the total supply, while those with 10 or more BTC control 82.51%. With Bitcoin's price once again having surpassed $100K, it becomes evident that only about 17.5% of Bitcoin is held by wallets with less than $1 million in BTC. This concentration of ownership raises concerns about market accessibility for smaller investors.

The 10–100 BTC tier is primarily composed of small institutional investors, while wallets with over 100 BTC are predominantly held by institutions and liquidity providers. This oligarchic trend suggests that as cryptocurrency market caps rise, retail traders may feel pressured to sell during downturns, further consolidating wealth among larger holders. Notably, the increasing costs associated with 

, such as electricity and equipment, compel many miners — often retail investors — to sell portions of their holdings to cover expenses, exacerbating this trend.

Bitcoin concentration leaves smaller investors at disadvantage

The establishment of the SBR represents a critical milestone in the integration of digital assets into national financial strategies, positioning the US at the forefront of the cryptocurrency revolution. As of mid-May 2025, Bitcoin's price has fluctuated between $102K and $105K, maintaining an optimistic long-term outlook despite short-term volatility. Continued institutional interest, bolstered by supportive governmental policies, enhances the legitimacy and stability of Bitcoin as an asset class.

However, as smaller investors continue to sell during market rallies, larger wallets are increasingly accumulating supply, tightening their grip on the market. Currently, over 80% of Bitcoin's supply is held in wallets containing $1 million or more in BTC. This trend suggests that while individual portfolios may grow, retail investors could find themselves at a disadvantage in an increasingly concentrated market.

In conclusion, the strategic Bitcoin reserve and the surge in institutional investments signal a positive shift for Bitcoin's legitimacy and its role in the global financial system. However, the growing disparity in Bitcoin ownership underscores the need for retail investors to navigate the market carefully. As these dynamics evolve, awareness of trends in institutional accumulation and wealth concentration will be crucial for all participants in the cryptocurrency ecosystem.

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Bybit x Santiment social sentiment report: Bitcoin reserve hopes leave Bitcoin holdings more concentrated

The Smart Copy Mode is a simple-to-use copy trading feature on Bybit that lets you reap profits from the crypto market even without prior trading experience.

Trading cryptocurrencies can be a lucrative way to earn from the ever-volatile crypto market. However, most people shy away from it due to the intense 

Thankfully, the world of trading now has helpful tools that have simplified crypto trading and made it easier even for beginners to make money from price movements.

First launched as part of a major upgrade in early 2023, Smart Copy Mode offers a simplified way to follow experienced traders known as Master Traders and automatically mirror their strategies. Today, it's one of the easiest and most intuitive ways for anyone, even beginning traders, to tap into the expertise of top-performing traders on Bybit and earn profits.

In this article, we’ll explore how Bybit Smart Copy Mode works and how you can safely make profits as a 

Smart Copy Mode is a simple-to-use copy trading feature on Bybit that lets you reap profits from the crypto market even without prior trading experience.

 Smart Copy Mode is part of the three major upgrades to the Bybit Copy Trading platform 

As of 2025, it remains one of the simplest and safest ways for users to realize returns from automatically mimicking successful Master Traders on the platform.

The Smart Copy Mode requires only three steps to follow a 

 and start earning. All you’ll need to do is enter an investment amount (minimum 100 USDT), select a Bybit account to transfer the funds from and click the 

The entire process is optimized for ease and risk control, making it ideal for anyone looking to trade without micromanaging their positions.

Here are some key features of the Bybit Smart Copy Mode that make it easier to trade while minimizing risks:

Rather than blindly copying a Master Trader’s full position size, Smart Copy Mode calculates a ratio based on both your balance and the Master Trader’s, helping you manage exposure proportionally.

Case in point: Let’s say a Master Trader has 10 BTC in their account but they enter a long position with only 1 BTC. In typical copy trading, a Follower who has 1 BTC in their account will automatically copy the trade with the whole 1 BTC, which exposes their entire portfolio.

However, with the Smart Copy Mode, a ratio calculated based on the available balances in the Follower’s and the Master Trader’s accounts will be exposed for copy trading. In this case, if the ratio is calculated to be 10%, the Follower’s copy trade amount will be 0.1 BTC instead of their full balance of 1 BTC. 

This proportional sizing is especially useful for beginners who may not want to expose their entire portfolio to a single trade.

Another amazing feature of the Smart Copy Mode is the Bybit CopyGuard which is designed to limit losses by adding an extra layer of protection for Followers. While most Master Traders strive to consistently implement successful trading strategies, it’s not uncommon to find some trades that will incur losses.

In such instances as a copy trader, you will incur losses similar to the Master Trader. That’s where the Bybit CopyGuard feature comes in handy.

With CopyGuard turned on, all of the Follower’s trades are optimized in the sense that the entry will always be at an optimal price not worse than that of the Master Trader. If an optimal price is not attained, the trade won’t be copied. However, note that at the point of trade execution, 

 may occur, causing small price discrepancies. However, CopyGuard filters out major price differences that could lead to instant losses. 

To give Followers even greater control over their risk exposure, Bybit now offers a Trailing Stop feature within Smart Copy Mode.

This tool automatically adjusts your exit point based on your account’s highest recorded equity. You simply set a retracement percentage (e.g., 20%), and if your equity drops by that percentage from its peak, all positions will be closed, locking in profits and limiting potential losses. 

Let’s say your account equity fluctuates as follows: 500, 450, 600, 900, 800, 1,000, 800. With a 20% retracement rate, the trailing exit equity adjusts accordingly: 400, 400, 480, 720, 720, 800, 800. When your actual equity drops to 800, the trailing stop triggers and your copy trading positions are automatically closed. 

, the final equity upon exit may differ slightly from the calculated exit equity.

The Trailing Stop feature is especially useful for volatile markets, helping you secure gains without manually monitoring every trade.

Together, Bybit’s copy by ratio, CopyGuard and Trailing Stop features work together to ensure that Followers have an extra layer of protection against losses when engaging in copy trading. 

Smart Copy Mode vs. Advanced Copy Mode: Which is better?

 allow you to choose between the Smart Copy Mode or the Advanced Copy Mode. While both provide an avenue for you to successfully copy a Master Trader’s strategy, there are several differences between the two that may make you opt for one over another. They are:

From the above comparison, it’s highly recommended to go for the Smart Copy Mode if you are a beginner to crypto or copy trading since it provides you with loss-limiting features before you learn your way around the field. For advanced traders, you can go for the Bybit Advanced Copy Mode or stick to the Smart Copy Mode.

Smart Copy Mode has made it easier to realize gains from copy trading.

 Regardless of your status as a beginning or advanced trader, you can have the assurance of a safe trading experience even with margin trading as all the risks are mitigated for you through the Smart Copy Mode.

Compared to the Advanced Copy Mode, the copy by ratio, CopyGuard 

 features within Smart Copy Mode help limit losses through reduced risk exposure. The enhanced automated settings on Smart Copy Mode are sure ways to successfully copy Master Traders without fear of wiping out your account. So, 

Beginner

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Bybit Smart Copy Mode: The way to secure copy trading profits

Invest like a VC with just $20. Common Wealth (WLTH) opens access to early-stage crypto projects through a transparent, community-driven platform.

The traditional venture capitalist (VC) investing model is often elitist and out of reach for many retail investors. While this is particularly the case in the world of traditional finance (TradFi), access to promising early-stage crypto assets is also frequently reserved for larger entities, namely institutional investors and 

. When we hear about a wildly successful crypto project and its token, we often find that its early backers are well-known investment funds or cashed-up VCs. These early investors are the ones who benefit the most from the token’s meteoric rise on the market.

 chain that aims to democratize the way VC investment works in the crypto industry. By using a community-driven approach to sourcing and investing in promising projects, the Common Wealth platform reduces barriers to entry to VC activities. Smaller-scale retail investors, both casual and experienced, are the primary beneficiaries of Common Wealth's unique approach to crypto investment.

Common Wealth has partnered with a network of notable crypto investors who refer high-potential projects to the platform, where these projects are carefully evaluated and qualified to be included in the investment products available to the user community. The entire evaluation process is also driven by community governance procedures, making it transparent and secure. Thanks to Common Wealth, investing in high-potential early-stage crypto opportunities is now open to anyone — even investors who want to start with as little as $20.

 (WLTH) is a decentralized platform that allows anyone to become a crypto VC by using a vetting-based, democratized, community-driven approach to selecting promising cryptocurrency investment opportunities.

The core idea behind the project is to tear down barriers to entry for crypto investment, particularly concerning early-stage promising ventures. Common Wealth has partnered with a group of prominent, savvy crypto investors (referred to as “Oracles”) who refer high-potential crypto investment opportunities to the platform. All the referrals are based on projects or assets that at least one so-called Oracle has personally invested in. As of May 2025, the platform works with ten Oracles, all of whom are notable investors with solid track records and standing in the crypto investment world.

The platform's governance community scrutinizes each referred project via “Oracle Ask Me Anything” (AMA) sessions, proposal workshops and analytics. Community investors then vote to decide on the projects' final eligibility. Any Common Wealth user can invest in qualified projects for as little as $20.

There are two main types of investors on the platform: casual and community members. The former typically invest smaller amounts, and pay with fiat currency using credit or debit cards, greatly simplifying access to the selected projects for users without an affinity for cryptocurrency transactions. Casual investors are normally those who adopt a hands-off approach to crypto investing and tend to start with smaller investment amounts.

Members of the second group, community members, invest larger amounts, or actively participate in the decision-making process for project selection. They’re the core of the governance community on Common Wealth. These investors use cryptocurrency to invest, paying with the 

The Common Wealth project was launched in February 2024 on the Base Layer 2 chain. In May 2025, it debuted its native token, WLTH.

All investment opportunities offered on Common Wealth are in the form of funds that provide exposure to promising projects and assets. For instance, the platform’s Priceless Fund invests in 14 high-potential 

 startup projects, while the Alpha Fund is based on early-stage projects in the areas of artificial intelligence (AI), the 

 (RWAs), decentralized physical infrastructure networks (DePINs) and gaming.

Unlike traditional investment funds, Common Wealth funds are completely permissionless and noncustodial, operating through blockchain smart contracts. As such, no central entity can influence fund management, thus ensuring transparency and discouraging vested interests.

Some funds are based on contributions from the wider user community, and are typically capped funds. There are also perpetual funds, which are funded by the investor community that participates in on-platform governance.

Bundles are Common Wealth funds based on a dynamic mix of assets satisfying certain criteria, e.g., a specific crypto niche. The platform has launched three such bundled products: 

Since the bundles are dynamic, the top five assets may switch according to market sentiment. All allocations within the bundles are equally split between their five assets. For instance, if you invest $100 in a bundle, each of the five assets in it will be allocated $20 of your investment.

The Common Wealth platform charges three types of fees:

When you invest in a Common Wealth fund, you’re issued a 

 (Slice NFT) that denotes your share of capital in the fund. Slice NFTs are freely tradable on the market, investors can quickly access liquidity by selling their Slices. Since these NFTs are fractionalized, you can sell a part of your Slice or the whole of it, per your preference.

Distributed Autonomous Operating System (DAOS)

The Common Wealth Distributed Autonomous Operating System (DAOS) is based on a set of 

 that automate the entire workflow of the platform’s governance processes. Project considerations, analytics related to candidate projects, vote management and other functions related to decentralized governance are handled by the DAOS.

 (DAO) consists of a set of rules and an on-chain community, the Common Wealth DAOS is an entire permissionless system of interoperable autonomous nodes that automates and powers all the platform’s governance elements and procedures.

What is the Common Wealth crypto token (WLTH)?

 asset issued on the Base Layer 2 chain. The token has a wide range of functions on the platform. While investments in Common Wealth are based on the USDC stablecoin, all other key functionalities are enabled via WLTH. These include:

WLTH is a capped asset with a maximum supply of 1 billion. As of mid-May 2025, its total supply stands at around 984 million. The chart below shows the token's supply allocation shares and vesting periods upon its launch in May 2024.

As of May 16, 2025, the WLTH token is trading at $0.003877, which is 98.2% lower than its ATH of $0.2148 on Jul 22, 2024 and 82.8% higher than its ATL of $0.002121 on Apr 18, 2025.

Long-term price forecasts for WLTH are mostly bullish.DigitalCoinPrice 

 of $0.0129 in 2027 and $0.0192 in 2030, whileCoinCodex 

 at around $0.0042 in 2027 but rise to $0.014 in 2030.

VC investment in financial markets remains an exclusive club that isn’t easily accessible to everyday retail investors. In most cases, this applies to the crypto market as well. Common Wealth's value to the broader crypto community lies in designing a system that makes investment in promising web3 initiatives accessible to everyone. The platform's novel model creates an opportunity to involve millions of individuals in the VC game. This could lead to significant growth in overall web3-based VC funding, and positively affect the entire crypto investment landscape over the coming years. Finding a future star in the crypto market with as little as $20 has never been easier — thanks to Common Wealth and the VC tools it provides!

Intermediate

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Common Wealth (WLTH): Invest like a VC — without being one

Trading

Bitcoin

Buy the Bitcoin dip! A corrective dip helps to unfold opportunities for traders to enter into a position at a lower price. Learn how to catch the wave.

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At some point, you may have heard the phrase, “buy the dip.” After crypto burst onto the popular scene, investment catapulted the price of many crypto coins higher, creating strong uptrends. When this happens, traders may develop FOMO and decide to buy even at high prices. However, 

 allows traders to use any corrective dip in price as an opportunity to buy Bitcoin at a cheaper level.

There are risks involved with buying dips in price, as a small dip may simply be the beginning of a large market crash. Market crashes are nothing new to Bitcoin, which has a history of correcting more than 75% — rendering “buy the dip” as a debatable strategy. Is buying the dip the best strategy for you? Let’s explore this topic further to find out.

“Buying the dip” is another way to say that you’re purchasing a financial asset after it’s fallen in value. While the asset is falling, it’s said to be in a “dip” where prices are lower than the previous high. When the market has been in a longer-term sustained uptrend, this dip in price presents an opportunity to buy more shares or coins at a discount. This way, if the market returns to new highs, you’ll have more shares or coins, which enhances your future gains.


Buying the dip is a universal trading strategy for most financial assets in the stock market or crypto market. But it’s an especially popular strategy for trading Bitcoin because crypto trends tend to be unusually long and strong. As a result, it’s challenging for traders to catch the opportunities, which results in traders buying at higher prices. Therefore, waiting for a corrective dip to unfold provides traders an opportunity to enter into the position at a cheaper price and accumulate more coins than if they bought them at a higher cost.

Dip buying can appear in any financial market — stocks, commodities, futures, forex and crypto. However, buying the dip in crypto can be different from employing the strategy within other financial markets.

Typically, the trends in the crypto market are stronger and the volatility is substantial. Therefore, when a corrective dip unfolds, the correction in crypto can be more significant than in other financial markets.


Take Bitcoin in 2021, for example. Bitcoin started the year by doubling in value. As the price continued to ascend, corrective dips were relatively shallow, between 18% to 31%. However, when Bitcoin’s price reached $64k, a larger crash began to unfold in the summer of 2021 which resulted in a 55% correction.

This is the biggest challenge in buying the dip with crypto. You may buy on a 20% corrective dip, only to find the crypto market eventually crashing over 50%. A long-term investor (HODLer) believes that buying the dip simply allows them to garner more coins while crypto is still early in its adoption stage. Their rationale is that if the price increases dramatically, their stash of coins could produce life-changing wealth.

There are many reasons why prices dip for Bitcoin that range from political instability, regulatory measures, and community influence. For example, the changes in the global economy are driving investment away from Bitcoin. The global pandemic of 2020 slowed commerce down, grinding businesses and economic activity to a halt. Due to citizens having doubts about their future employment, they pulled back investments in anticipation of lower pricing.

In addition, the news cycle may create short-term dips. In 2021, 

, making it illegal for them to do business there. As a result, a majority of Bitcoin nodes shut down or had to move their operations somewhere else, making the Bitcoin network less secure as there were fewer nodes to verify transactions.

Sometimes, an asset is simply overbought and needs to consolidate its previous gains. There are technical indicators traders can apply to price charts to determine if a 

 is about to unfold. One popular technical tool to use indicates bearish divergence.


Going into the April 2021 high, Bitcoin was exhibiting technical price divergence. Higher price highs kept forming, while the 

 (RSI) indicator was displaying lower highs. Especially after a long uptrend, this RSI divergence implies that a potential price correction may unfold. A trader buying the dip who spots this signal can choose to wait for a cheaper price before buying more coins.

Most of these reasons are explained away by Bitcoin enthusiasts as FUD, a crypto slang acronym for fear, uncertainty and doubt. Many people still don’t believe investing in cryptocurrencies is wise, since there aren’t time-tested cash flows or proven ways to value crypto networks. This results in FUD, causing investors to question their investments — and to consider selling their Bitcoin.

, the strategy of buying the dip can be utilized. A few altcoins that are large enough and within the top 20 by 

 could be candidates for buying the dip. This is because there are enough buyers and sellers to balance each other out so that the larger price trends appear on the chart.

Unfortunately, for altcoins with a smaller 

, buying the dip could be disastrous. Smaller altcoins are much riskier and more susceptible to fraud or compliance risk, making their prices extremely volatile. As a result, a small altcoin’s price might crash and never recover — so that investors need to be careful not to allocate too many funds toward them.

Catch a Falling Knife vs. Buy the Dip: Differences

The evil cousin to “Buy the Dip” is “Catch a Falling Knife.” The falling knife analogy is used by traders to suggest that the market is crashing, and may not rebound anytime soon. Suppose that a knife is dropped from an all-time high above. If you were to stick your hand out and try to catch it, you might get cut up pretty badly. There’s a chance you could catch the knife without hurting your hand, but are you willing to take the risk? 

This is how it is when markets are crashing. Traders might see lower prices and decide to buy in anticipation of a rebound. However, that rebound might not come for several months — or even years. Traders involved in the 2018 crash are familiar with this phenomenon, as the bear markets lasted for 11 months and collapsed 85%.

The big difference between catching a falling knife and buying the dip is that dips tend to be relatively small and contained within the context of the larger uptrend. Retracements of 20–40% are normal in crypto.

On the other hand, a falling knife is more like a crash or a collapse, where the vast majority of the price is retraced swiftly and deeply.

Buying the dip is really about market timing, with two common strategies. The first involves adding support trend lines to the charts, and the second is using an oscillator, such as RSI, to help identify turning points.

Let’s start with trend lines. When the market is in a strong uptrend, look for common swing lows, and connect them with a trend line. Extend this trend line to the right, and it should be below the current market price.

Then, as a corrective dip unfolds, look to buy when the price reaches the support trend line, while targeting new highs. This process can be repeated — again and again — as the market frequently dips, even within a strong uptrend.

In the image above, a support trend line can be drawn for Bitcoin from January to April 2021. There were multiple occasions where Bitcoin’s price dipped to the trend line, offering an opportunity to buy.

The trend line won’t hold up forever. When it breaks, that’s a clue that a larger correction, and even a possible crash, may be unfolding.


Another common strategy for buying the dip involves waiting for oversold oscillators on the intraday chart. When Bitcoin is in a strong uptrend on the daily chart, scroll down to a 4-hour chart and add an oscillator, like the RSI.

The RSI indicator is versatile to help traders identify when an asset has become oversold. Its signals can alert you that the dip may be coming to an end, offering an opportunity to buy.

In the Bitcoin chart above, there are several instances when the RSI is signaling oversold conditions, meaning a rally is about to begin. A trader could use those signals to buy while targeting new highs.

The challenge with using a tool like RSI is that if Bitcoin were to crash, the oversold conditions would be a buy signal — even though the market is collapsing. Therefore, RSI works best when conditions are believed to be sustaining the uptrend.

“Buying the dip” itself is just a catchphrase. Traders need to turn the phrase into a strategy that’s similar to what we’ve outlined above. Therefore, to successfully buy the dip, you need to use 

 to time the market. There are many other oscillators and indicators to use for this purpose.

Aside from the strategies discussed above, Bitcoin must be in a strong uptrend. The strength of the uptrend is what allows the price to recover from the brief dip. If the uptrend is lacking strength, then the strategy becomes riskier as the uptrend struggles to bail you out.

Worse yet, if Bitcoin is in a downtrend, then buying the dip won’t work because you’ll get caught in bull traps, leading to losing trades.

 means buying a predetermined amount of an asset at predefined timing intervals. An example would be buying $500 of Bitcoin on the first Friday of each month.

The main difference between dollar-cost averaging (DCA) and buying the dip is that DCA is predefined, irrespective of the price of Bitcoin. On the other hand, buying the dip is fully dependent on the price of Bitcoin, and requires the trader to correctly time their entries into new bull rallies.

Therefore, when deciding whether to DCA or buy the dip, consider your skill levels in technical analysis and timing bullish reversals. DCA doesn’t require any special skills — just a calendar to plan your buys. Buying the dip, however, does require the trader to understand technical analysis and be able to implement it with high accuracy.

If you feel you need more practice on timing entries, then consider DCA, which is designed for newer traders.

There are several risks a trader faces when they decide to buy the Bitcoin dip.

Most of the risk is associated with analytical errors. There are certain market conditions in which buying the dip tends to be more successful. If the trader misdiagnoses market conditions, then they’re going to be more susceptible to losses.

Additionally, buying the dip requires a rules-based strategy so that the trader knows when to enter the position. If the trader doesn’t have rules underlying their strategy — or doesn’t follow their own rules — then the likelihood of loss looms larger.

Lastly, the volatility of crypto makes it difficult to determine if, for example, Bitcoin is simply going through a small dip, or if it’s the beginning of a larger crash in prices. If it’s the latter, then buying too early in the crash will expose the trader to a significantly large loss. Over the past decade, it hasn’t been unusual for Bitcoin to correct more than 75% of its price.

Buying the dip is a popular catchphrase used by investors who intend to hold on to dear life with their assets, and typically in a long run. By itself, buying the dip isn’t a strategy for making money, which is why traders will want to create their own rules for buying and selling on minor dips in pricing.

In other words, buying the dip can be a successful tactic if the trader considers current market conditions. Otherwise, they might get caught at the beginning of a market crash, which will create losses in their trading account. As with any other trading strategy, buying the dip is best attempted with both market awareness and experience in technical analysis in your toolbox.

Buy the Dip: Should You Buy the Bitcoin Dip?

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Buy the Dip: Should You Buy the Bitcoin Dip?

Grab Up to 5,000 USDT in Rewards

Compete for 2,500 USDT USDT Every Week

Grab Up to 5,000 USDT in Rewards