Is Bitcoin a Buy After Its Recent Selloff?

Bitcoin (CRYPTO: BTC) continues to slide, recently falling to 50% below its all-time high. That's its largest drawdown in several years. It's also somewhat unexpected. President Trump announced the U.S. Strategic Bitcoin Reserve in March 2025, and while cryptocurrency prices initially soared on the news, they have since fallen after topping out late last year.

This certainly isn't the first time that Bitcoin has sold off. Those who have been around long enough have even seen dramatically worse declines over the years. Is Bitcoin still an asset investors should buy on the dip? Here's the smart way to buy into Bitcoin's recent sell-off.

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Remember, volatility is to be expected

Even after this latest decline, Bitcoin has still returned over 8,800% over the past decade. Few stocks can say the same. But Bitcoin's massive returns have come with stomach-churning volatility. Even if Bitcoin extends its decline to more than 60% below its high, it would only continue the pattern of Bitcoin enduring a massive sell-off every few years.

Bitcoin Price data by YCharts

Unfortunately, there's no guarantee that Bitcoin will recover from this sell-off, even though it has every time before. That's the risk of investing. As the old saying goes, there's no free lunch in the market.

Bitcoin's primary appeal to investors hasn't really changed

Most people who invest in Bitcoin view it as a sort of digital gold, an anti-inflationary asset that adds to a diversified portfolio. There's still inflation, a steady weakening of the U.S. dollar caused by a federal government that runs large budget deficits, ultimately pumping more dollars into the economy.

Bitcoin trades in dollars, so like real estate and other assets that appreciate against a weaker dollar, its dollar-denominated price could continue to rise over the long term. As long as the U.S. dollar's buying power continues to erode due to inflation and investors broadly view Bitcoin as a hedge against it, there's a solid long-term investment thesis for Bitcoin.

Here's the smartest way to buy into this sell-off

The reality is that nobody knows for sure how far Bitcoin might fall, and as you've seen, prices can fall pretty far. Therefore, dollar-cost averaging is the best way to protect yourself as a Bitcoin buyer. That means investing your money in fixed amounts across many scheduled trades. Perhaps that's investing weekly or monthly. It all depends on your budget and comfort level.

Dollar-cost averaging's primary benefit is that it averages your purchases over time, so you're unlikely to wind up with a poor cost basis if you're unlucky with your timing. Most importantly, don't put too much of your portfolio into Bitcoin. It's a volatile asset. If Bitcoin comes anywhere close to replicating its past returns over the next decade, investors won't need much exposure to see a big impact on their returns.

Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.