Everyone talks about bottom fishing, but what's the right way to do it?

2024.06.27

Everyone talks about bottom fishing, but what's the right way to do it?

The key is to actively buy the dips and position yourself correctly.

2024.06.27 - 09:22:05

Navigating Web3 tides with focused insights

The key is to actively buy the dips and position yourself correctly.

Author: 𝗰𝘆𝗰𝗹𝗼𝗽

Compiled by: TechFlow

Real wealth is created during consolidation phases—like right now.

But no one explains how to profit from it. Everyone just says "buy the dip," yet no one shares specific methods. This thread will be your playbook to maximize gains during market downturns.

We are currently in a consolidation phase. Our primary goal is survival. Those who achieve this will emerge strongest in this bull run.

The key is actively buying the dip and positioning yourself correctly. Here is my ultimate playbook on how to do exactly that.

1. Avoid high-risk plays

During such consolidation periods, taking major risks can devastate your portfolio. Limit high-risk positions to 3% or less of your portfolio. Focus instead on low-to-medium risk opportunities.

2. Stablecoins

Keep 30% to 60% of your portfolio in stablecoins. They help reduce volatility and position you to buy the dip when the opportunity arises.

3. If you lack funds to buy the dip, get a Web3 job

If you don’t have capital to build positions, find a Web3 job. These consolidation periods typically last 4–6 months—plenty of time to build a minimal portfolio, especially with so many opportunities available now.

4. Level up your skills when the market is boring

This is what separates winners from losers. Those who research and actively learn new skills during dull market phases will stand out in this cycle.

Here are some valuable skills:

Programming
Video editing
Copywriting

How to buy the dip

This means buying at the lowest possible price—but here's the problem: how do you predict the bottom?

The answer is simple: nobody can predict it. But we can use strategies to get as close as possible.

To effectively buy the dip, you need answers to three key questions:

When should you buy?
What should you buy?
How should you buy?

Let’s dive into each.

When should you buy?

The typical bull market pattern is: Halving → 18 months → All-Time High (ATH). We can divide the entire cycle into two main phases:

Phase 1 – Buy
Phase 2 – Reap

Here’s a rough chart showing these phases:

Buy and Reap

Phase 1 – The "buy the dip" season, usually lasting 14 months. Our task: accumulate positions.
Phase 2 – Market approaches peak. We begin locking in profits.

What should you buy?

For maximum returns, we need to identify undervalued altcoins.

But remember the risk levels:

High market cap = Low risk
Low-to-mid market cap = High risk

Choose based on your risk tolerance and portfolio strategy.

Undervalued altcoins are often in price discovery mode—they can be either high-cap or low-cap assets.

You can also increase exposure to $BTC/$ETH to reduce portfolio volatility.

How should you buy?

Buying the dip is complex. You shouldn't invest all your capital at once, as prices may continue falling. That’s why we use a cost-averaging strategy.

Let me explain.