My mentor will regularly tell me that you can not lose your bitcoin investment if you holding still and do not sell for fear of the market uncertainty when price is falling with a strong bearish momentum. You lose at the minute you sell below your bought price. The price of bitcoin has dip more than twice this week and yesterday price went down below $64,000, today the price has taken flight to $70,000. A move that was lest expected. The solution to not lose out is to hold and buy more from the dip.
No one wants to sell at a dip intentionally. But because of their wrong planning, they are forced to sell at a dip. Be it panic selling or force selling. Now the example you gave, below $64k to $70k just in a day, shows why selling emotionally in volatility is dangerous. Many people sell at times when panic is at its highest, and that's when the market snaps back. But the learning point from here is that it won't always be like this. The learning point is that prices are unpredictable in the short term. So it's foolish to change your decision based on short term mood. Buying at a dip may be good, but in that case the right rule is:
1. First, your base plan will be regular DCA (weekly or monthly) from the discretionary budget.
2. Additional purchases at a dip will be made only when it is within your budget, possible without breaking the back up fund, and it will not close your regular DCA.
Let me give you a small example. Suppose you do DCA of $100 every week. When the market went from $70k to $64k, if you panic and sell everything, then when it goes back to $70k, you will be in a worse position than before when you buy again. This is the fear cycle. But if you follow the routine and buy $100, then in a week of $64k you will get more sats than before. And if you have an extra $50 in your budget, you can add that and buy. As a result, your average cost will be balanced over time. This is the power of DCA discipline.
