Is Bitcoin a Buy After Falling 40% From Its All-Time High?

It seems hard to believe, but just seven months ago, Bitcoin (CRYPTO: BTC) was trading at an all-time high of $126,000. The future was so bright you had to wear shades. Many thought Bitcoin was on a clear trajectory to $1 million.

But what a difference seven months make. Bitcoin is now down 40% from its all-time high and trades for just $76,000. For crypto investors, is this another "buy the dip" opportunity, or does Bitcoin have still further to fall?

Yes, buy the dip

Historically, buying the dip on Bitcoin has been a very profitable strategy. Every time Bitcoin falls 10% or more, crypto investors should think about buying more of it.

If you look at a long-term chart for Bitcoin, you can see why. The world's most popular cryptocurrency has been on a long-term uptrend for more than a decade now, regularly posting annual returns of 100% or more.

From November 2017 to December 2024, Bitcoin soared from $10,000 to $100,000. That's truly exponential growth.

Image source: Getty Images.

While there have been some down years along the way, Bitcoin has always recovered. In 2022, for example, the price of Bitcoin collapsed by 64%. But it followed that up with returns of 156% in 2023 and 121% in 2024. Two extraordinary years more than made up for one lean year. Investors who bought the dip when Bitcoin fell all the way to $16,000 watched with glee as Bitcoin skyrocketed to $126,000.

No, don't buy the dip

But there's just one problem here. Bitcoin is highly cyclical and typically suffers a major drawdown every four years. While a decline of 40% is painful, it might not be painful enough. In other words, Bitcoin might still have further to fall before the next crypto bull market cycle begins.

You can see this easily enough by looking at data from online prediction markets. On Polymarket, for example, traders give Bitcoin a 50% chance of falling to $55,000 this year, a 42% chance of falling to $50,000, and a 32% chance of falling to $45,000. In fact, Bitcoin has approximately the same chance of falling to $25,000 (8%) as doubling in value to hit $150,000.

Those numbers support the notion that Bitcoin might have further to fall. Even when Bitcoin looked like it was about to break above $80,000 this year, there was nervous chatter that Bitcoin might fall all the way to $45,000. That would mark a 64% decline in value from its all-time high, just like what happened in 2022.

Buy Bitcoin for the long haul

As long as you're willing to take a patient, buy-and-hold approach, Bitcoin remains a buy. But you'll have to be comfortable with the crypto's inherent volatility. Bitcoin never goes straight up, and there are plenty of fake-outs along the way. But over the next decade, I'm fully expecting Bitcoin to be among the world's top-performing assets.

Dominic Basulto has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.