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On July 6, Bitcoin dropped more than 2% after Strategy (NASDAQ:MSTR) — a corporate buyer of Bitcoin — disclosed in a regulatory filing (1) that it had sold about $216 million worth of the cryptocurrency.
That’s the second time this year the company has sold some of its Bitcoin reserves — a complete reversal of its former “never sell” approach. Strategy posted a $12.54 billion net loss (2) in the first quarter of this year as the price of Bitcoin slumped.
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Later that day, Bitcoin rebounded 1.8% (3) after President Donald Trump said that he’s “become a big crypto guy” when responding to a reporter’s question about whether Bitcoin might be included in Trump Accounts (4) — the tax-advantaged 503A accounts that launched over the July 4th holiday weekend.
The crypto market is notoriously volatile and hyper-sensitive to news cycles, from world events to regulatory shifts to viral tweets. Sometimes that volatility is short-lived; other times it’s a sign of a coming slump.
But there’s another reason for big price swings.
“Unlike stocks, for example, cryptocurrencies have no cash flow and do not have the ability to pay dividends,” according to Fidelity Viewpoints (5). “And unlike commodities (like gold and copper), they have no industrial use.”
With so much volatility, is it worth buying the dip?
A dip or a Bitcoin bear?
Cryptocurrency is a type of digital currency that’s used for secure financial transactions. It’s not issued by governments or central banks; rather, it operates on blockchain technology and trades on cryptocurrency exchanges.
While Bitcoin is the most common form of crypto (it’s been around since 2009), there are many others, including Ethereum, Litecoin and Ripple.
Buying the dip means buying crypto after its price temporarily drops. The risk lies in how long the dip lasts — after all, you don’t want that dip to turn into a crash.
Over the past 12 months, Bitcoin’s price changed by -45.3% (6). It’s sitting around $65,000 as of July 17, down from $125,000 last October.
Choose a safe-haven alternative instead
Bitcoin was once dubbed "digital gold" for acting as a store of value outside the traditional financial system. But history has shown it's anything but stable. Bitcoin has lost more than 70% from its peak during every major market cycle (8).
Gold, on the other hand, has weathered wars, recessions, inflation spikes and financial crises over hundreds of years. Because it can't simply be printed like fiat currency and isn't dependent on corporate profits, it has often served as a hedge when confidence in financial markets weakens.
Gold prices have more than doubled over the past five years, hitting multiple record highs along the way and outpacing the S&P 500 over the same period.
Opening a gold IRA with the help of Goldco allows you to invest in gold and other precious metals in physical forms while also providing the significant tax advantages of an IRA.
With a minimum purchase of $10,000, Goldco offers free shipping and access to a library of retirement resources. Plus, the company will match up to 10% of qualified purchases in free silver.
If you’re curious whether this is the right investment to diversify your portfolio, you can download your free gold and silver information guide today.
Should you buy the dip?
For investors who already own crypto, the question is whether to hold, add to their portfolio or exit the market. For prospective investors, the question is whether to buy the dip.
Buying the dip requires an understanding of market conditions and a high tolerance for risk — and perhaps a bit of luck. Dips might simply be a short-term fluctuation driven by the news cycle — like Strategy selling Bitcoin reserves — or an indication of a prolonged bear market.
Richard Smith, CEO of RiskSmith, told CNBC (9) Select that if you’re investing in crypto, you should have a mindset of holding for five to 10 years.
If you do decide to buy, remember that price isn't the only number that matters. Trading commissions, spreads and platform fees can all affect your overall returns.
If you’re looking to diversify beyond traditional stocks and ETFs, Robinhood Crypto lets you buy and sell cryptocurrencies with as little as $1.
With some of the lowest trading costs on average in the U.S., you could end up with up to 2.7% more crypto compared to other platforms.
Robinhood Crypto makes it easy to make investing a habit with recurring buys on a fixed schedule, while giving you access to all your favourite coins — from Bitcoin and Ethereum to Solana, Dogecoin, XRP and more.
You can also transfer crypto securely to other wallets, set custom price alerts, track market trends and manage your portfolio all in one place.
Robinhood ensures that the security of your cryptocurrency is a top priority, with the majority of coins held in offline cold storage. Robinhood also carries crime insurance against theft and cyber breaches and 24/7 customer support is available if you need help.
Stick to an index fund
Despite a slight bounce after an endorsement from President Trump, Bitcoin is still down over 32% for the year as of July 20 (10). With prices still roughly 52% below their previous highs and inflation continuing to cloud the economic outlook, many analysts believe crypto volatility could persist for some time.
For those who lose sleep over big swings in their portfolio, an index fund may offer a more comfortable alternative. Instead of betting on a single volatile asset, index funds provide instant diversification across a broad basket of the largest stocks, helping to smooth out the bumps that inevitably come with investing.
Apps like Acorns allow users to invest spare change from everyday purchases automatically into low-cost index ETFs.
All you have to do is link your cards and Acorns will round up each purchase to the nearest dollar, investing the difference — your spare change — into a diversified portfolio of ETFs managed by experts at leading investment firms like Vanguard and BlackRock. Over a lifetime, a little bit of consistency can go a long way.
With Acorns, you can invest in an index ETF built and managed by experts with as little as $5 — and, if you sign up today and set up a recurring investment, Acorns will add a $20 bonus to help you begin your investment journey.
Invest in real estate with as little as $100
Real estate has long been a popular asset class for investors seeking growth and income. Unlike Bitcoin, real estate is backed by physical assets that generate value through rental income and property appreciation.
Because property values are driven by local housing markets and rental demand rather than investor sentiment alone, they often behave differently from stocks and cryptocurrencies.
The downside? Owning property comes with plenty of responsibilities. Purchasing investment property usually requires significant capital — not to mention the time and expense of maintaining it.
But with crowdfunding platforms like Arrived, you can invest in real estate without the burden of mortgages or managing tenants. And you can get started with as little as $100.
Backed by world-class investors like Jeff Bezos, Arrived lets you purchase shares of vacation and rental properties across the country.
Arrived distributes any rental income generated by properties to investors monthly, allowing you to potentially set up a passive income stream without the extra work that comes with being a landlord of your own rental property.
The best part? For a limited time, when you open an account and add $1,000 or more, Arrived will credit your account with a 1% match.
- With files from Vawn Himmelsbach.
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Article Sources
We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines.
MarketWatch (1); Strategy (2); CNBC (3), (8), (9); Trump Accounts (4); Fidelity (5); Investing.com (6); Yahoo Finance (10)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
