Is buying a dip a smart move?

Downtrends are common in cryptocurrency markets during bearish downtrends. Most of the time it can last for a long time. In the current crypto winter of 2022, many coins are declining in value. Investors are weighing their options carefully and considering whether buying a decline in the current market is a smart move.

Some investors move their assets to safer locations as they weather the storm. On price charts, dips are identified as troughs. In the case of Polkadot, expert predictions vary as to when the coin will eventually return to its expected price.

Polkadot has dropped from an all-time high of $54.98 to just $5.58 as of November 2021, an exponential drop for the coin.

DOT is unique because the project focuses on interconnected parachains. These parachains are customized, project-specific blockchains intertwined with Polkadot’s relay chain.

Relay chains (polkadot networks) secure and connect these parachains with numbers between 100 and 250.

Polkadot Price Prediction

The current market trend was also observed in Polkadot as the bearish reversal continued over the months of 2022.

DOT price fluctuations are highly dependent on the activity of market forces. Investors keep their fingers crossed to see if the bull market will rise as the coin breaks below the previous support level of $10.33.

The general market sentiment is that the bulls will bounce back if the polka dot breaks out of the $7 resistance level.

However, the strong bearish trend will continue if the price breaks down of the $5.70 support level.

So far, in 2022, the coin’s price is gradually declining. For example, even parachains felt the impact as Acala USD (aUSD) lost its peg to the dollar.

Judging by Bitcoin’s dominance, the decline in Bitcoin’s price and dominance generally indicates that the bear market may be protracted.

buy dip or not?

It’s very tempting to write off the entire project as a colossal failure. However, long-term cryptocurrency investors know that the market can suddenly turn into an uptrend.

It’s easy to see why the cryptocurrency market is currently trending downward due to macroeconomic factors such as inflation. Amid fears of a global recession, inflation rates in major countries such as the United States are on an upward trend.

Also, the Ukrainian-Russian conflict is having a negative impact on the market. With the crash of the USD-pegged stablecoin Terra, it is commonly believed that no project is immune to market forces.

For now, experts believe that buying the decline favors long-term investors. However, the volatility and risks associated with cryptocurrencies can lead to further price declines.

Therefore, it depends on the investor’s strategy and plans. But here is some general advice: Only use money you can afford to lose to buy dips. Price predictions are mere speculation, and historically, cryptocurrencies often deviate from these assumptions.

Featured image from Pixabay and chart from TradingView.com