Definition ∞ Dip buying is a trading strategy where an investor purchases an asset after its price has experienced a temporary decline. The underlying premise is that the price drop is a short-term anomaly, and the asset will soon recover its previous value or continue its upward trajectory. This approach seeks to capitalize on perceived temporary market weakness to acquire assets at a reduced cost.
Context ∞ The discussion around dip buying in cryptocurrency markets often highlights the high volatility and speculative nature of digital assets. A critical debate involves whether historical price action provides reliable signals for future recovery, given the rapid shifts in crypto market sentiment. Observers watch for how macro-economic factors and regulatory news influence investor reactions to price declines, potentially impacting the effectiveness of this strategy.
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