Bitcoin Falls Below $40,000 Again. Should You Buy the Dip?

Ground control to Major Tom, it looks like the rocket is settling to land again.

After a rally speculated to have been prompted by the political turmoil in Europe, Bitcoin recently plummeted in value again. With Bitcoin off more than 40% from its 52-week high, many investors are wondering, "Do I buy the dip?" among other key investment questions.

Read on for our perspective on Bitcoin's current situation and future potential so you can make an informed decision about this market opportunity.

World events will be key to crypto's stability and adoption

The entire notion of cryptocurrency stemmed from the idea that traditional financial institutions were no longer capable of maintaining a currency system that was stable. People were losing faith in the systems they had known and were keen for a new one.

Current world events are also playing a key role in crypto's rising and falling prices. With the recent displays of governmental influence on personal finance (the freezing of personal funds in Canada, the sanction on doing business with Russia, etc.), there has been a heightened awareness of personal control, or lack thereof, surrounding current financial systems.

Ukraine has long been one of the leading countries in terms of crypto adoption, and the crypto community has responded by rallying millions of dollars to send to the country. However, on the flip side, as countries refuse to do business with Russia, Russian citizens and entities are speculated to be converting their rubles to crypto to maintain the value of their assets and transact with the outside world.

As global markets fluctuate amid a number of ongoing crises (Ukraine, COVID, etc.), it is likely that the price of crypto will fluctuate as well. As you're evaluating buying the dip, keep in mind the world is in the midst of a very volatile time, and steep, swift increases and drops are likely.

Upcoming events to be aware of

Both the Federal Reserve's plan to raise interest rates and the upcoming quarterly expiration of Bitcoin futures contracts could have big effects on the price of Bitcoin. The next Fed meeting is mid-March, while Bitcoin's quarterly futures expiry date is late April.

With the demand for the dollar set to increase due to the Federal Reserve's recalibration, it is possible that alternative assets like Bitcoin will see a decrease in price. Additionally, with the expiration of Bitcoin's quarterly futures contracts, it's difficult to say whether more people will buy Bitcoin or sell it based on the terms. Either way, with the increase of activity, Bitcoin's price will likely fluctuate significantly as it has in the past on futures expiry days.

Consider your investment strategy

If you're a long-term HODLer, consider that the price of Bitcoin is still considerably below its all-time high of $68,000. Even if you buy now, although lower prices are likely to come, there is still a considerable chance you'll have made a profitable investment in the long run.

Crypto and Bitcoin are relatively new investment opportunities that are still gaining popularity and traction. Even if you buy at what seems like a high price now, this could easily be at the low end of the price charts in years to come.

The bottom line

World events are extremely tumultuous right now, and so is Bitcoin. Extreme dips and spikes are to be expected, but if you believe in the long-term value of Bitcoin, then ride out the volatility. If you're interested in buying Bitcoin, but don't know the best place to purchase, check out our guide to the best places to buy Bitcoin.