How to Accumulate During A Crypto Market Crash

Or you can say, catching a falling knife with style

Having been hammered by a crash practically on a monthly basis throughout 2022, I feel like the market has successfully conditioned me to a certain behavior. I gotta say, my accumulation game is getting nothing but polished with all this volatility.

This experience is personal, meaning the strategy might not apply to everyone despite it worked well for me (i.e. some people might get constrained by taxes or fees.)

This is merely sharing, not financial advice.

Compact shopping list

Crash can feel distracting as it is disturbing. Initially, you’d wish for it for the sake of “discount” and “cheap goods”. But when it actually comes it feels like all hell breaks loose. Those never-ending red candles getting printed relentlessly, for several days, would haunt your sleep for nights to come. During the crash, you’d go to social media and news and see everyone else is losing their minds, be it fellow retail, or a founder of billion dollars company. (Hint hint, Celcius).

Basically, most people would end up either doing nothing (paralyzed) during a crash or doing stupid things. (Like capitulate.)

But… but… didn’t you plan to accumulate?

Accumulating during a huge market crash is my personal favorite. Because it’s a weird satisfaction to snag a bottom price. Personal preference, I know. But I’m making my obsession into a strategic accumulation game.

After much trial and error, efficiently executing purchases during a market crash involves this one key strategy: having a compact shopping list.

You will just focus on one or two coins. For me, often it’s just one coin the majority of the time. I’m just focusing on accumulating that asset and no other.

Capital is power during a bear market because it’s easy to lose it by being too mindless with your purchase. Every purchase must be concentrated and thoughtful so as to not waste capital. The game here is to stay solvent longer than the market stays irrational.

This can be achieved by two things: healthy cash flow on your personal finance, and second, by being a meticulous buyer.

During the extreme volatility, I would rather concentrate all the resources (mental, and financial) on very few assets, and often, just one major asset.

And that also means I’m ignoring all the other things.

How would you determine those special must-buy tokens? The only answer is to develop your own thesis. You have to be sure with your choice as you’re going to bet big on it.

Ignore opportunities, however lucrative they look like

With everything being cheap, it’s easy to get tempted to spray and pray. A lot of tokens have reached levels not seen in months, and for me, the FOMO can feel real.

But I have to hold my horses.

My earlier mistake was too over-diversified. It’s better to bet big on something you’re so bullish about than bet smaller amounts on various assets you’re not very convinced about. ETH and Bitcoin, for example, despite their relatively cheap price right now, I have decided that they are not for me.

They’re not among the list of tokens included in my grand thesis. There are better options that are aligned with my goal. If I need them (i.e. for lending-borrowing, NFTs, I can always buy them later.)

Remember, for many tokens, you can always buy them later. You can also rotate from your one big investment to other smaller plays once the market situation is more favorable and the momentum presented itself.

I’m not always good at resisting the “X is cheap” temptation. For that, I do admit I have a small fund I use as a ‘souvenir’ play. Where I just buy interesting tokens, a small amount, simply to satisfy my craving. Just so I have some bought at a certain historic price level.

Ideally, this shouldn’t happen. But hey I’m not perfect.

Not doing anything when the market is ranging

When you look at it, a trending down market is actually 80% boring. The crashes happened only a few days in a month, and the rest of it, coins are nothing but ranging around a certain price level.

2022, six months in, the market has conditioned me to be a relentless bidder, the persistent one like those moms at traditional markets. Unless the prices have down 10% or 20% in a day, it’s better to refrain from buying anything.

Again, I am also not perfect at this. The combination of boredom and some unspent capital can lead a girl to go shopping with no plan. But more and more I am trained to deploy capital only on heavy red days now. I would limit myself on how much I’m allowed to spend on ranging days—only a small percentage. Just enough to satisfy the craving or reached a certain goal. (I.e. it bothers me to have 986 tokens, so I let myself buy at whatever price to make it 1000. Weird pet peeves.)

You can never nail the bottom (tier-buying strategy)

You think it’s the bottom only to find the bottom isn’t in.

The second time you think like this and the market would disappoint again.

You’d likely got it wrong on the first two buys — or even more — and it’s okay.

When I accumulated during a violent market crash like yesterday, my two first purchases would be too expensive by the crash standard. I’d caught a falling knife.

Although, in the grand scheme of things, in the future, it probably doesn’t matter if I buy ETH at $1700 or $1500 (ETH is picked as an example.) I’m just very particular. I mentioned earlier it’s like a game to me that I partly use as a way to not lose my mind during widespread market panic (I’ll explain later below.)

So, accumulating means dividing the deployment into several purchases. This is roughly the rules.

• Start with x amount, very small.
• If the token drops to a certain price (I use psychological points such as BTC 25k, BTC 21k), I buy that level with a bit more money than the previous one.
• A little help from TA indicators to determine whether the price level are good entry.
• Do not FOMO the bounce. Before the true reversal, which is triggered by major key events, bounces are just shorters covering their shorts.
• Deploy lots more than usual on deeper wicks. Hunt for deep wicks. You never regret buying on wicks, especially a violent one, even if later the token drops more.
• Determining range/levels of price is more gut than an exact science. You have to know the price action/behavior of the token like the back of your hands. This is not difficult as your coin is the one you are obsessed with. (Because if not why accumulate, right? See the previous point about “compact shopping list.”)

Ignore fears

You can only execute all the above if you end up not panicking during the crash. Most people are either stunned, frantic, or simply not executing their plans.

How to not panic? Nope, you will. I will too. It’s just.. try to suppress the fear as much as possible by using these mind trickeries.

My first method is kinda…unorthodox.

During major panic moments, I would see crypto Twitter and see people losing their minds, such as this particular DeFi founder who capitulate emotionally and declared everything is a scam. That strangely makes me vow to myself to not be like them because of how ridiculous I would look.

And that somehow helped me get my composure back. 😂 My contrarian — and trying to be edgy self — just doesn’t like to be among the mainstream. During a market crash, losing your mind is too mainstream lol.

You can use any personalized calming method such as your pets, I don’t know, everyone is different. But other than that, here are some more generic tips:

• Close all leverage or if you’re opening one, make sure their liquidation price stays low.
• Make it a game to increase the number of tokens and focus on that instead of the fiat price. Make a fun game out of everything.
• Hedge by shorts. (This one is tricky and could fire back if you’re opening short too late. Opening short is better when the market is ranging pre-crash. And use no leverage. If you lose money on your non-leveraged short, it will be only when the market recovers fully and back being bullish, which would be so okay as now all the tokens you have accumulated would be in profit.)
• Having a stable personal finance situation also helps. When your basic needs are covered, you can make a bet with a calm mind.

Lately, I noticed how this year, large market crashes typically happen for a few days in a month. Usually, it happened around inflation/CPI announcements. That’s actually perfect, as the market lets you recuperate for the rest of the month before getting hammered again with next month’s volatility.

You may ask, why not just buy on the actual bottom.

Well, you can choose to do that, if you know where is the bottom.

I don’t claim I know, so the only thing I know is to keep buying at what I think is a good price. June 2022 could be the last time you ever buy Bitcoin at $20,900. Nobody knows. What I can control is that I have a certain monthly allocation for crypto that has to be DCA-ed.

This strategy will work until it doesn’t. For now, this is the way to go.