If a recession leads to a significant drop, how would I bottom fish?

Today I happened to chat with a friend about this issue, and I will share my personal views, which are just personal opinions and do not necessarily represent the truth. The data used are all from economic recession data after the year 2000.

1. Use S&P 500 as a reference

Recessions often bring declines in risk markets, and the S&P is generally a good reference:

A. In the recession caused by the tech bubble burst in 2001, the maximum drop of the S&P 500 was -49%, with an average drop of -22%.

B. In the recession caused by the financial crisis in 2008, the maximum drop of the S&P 500 was -57%, with an average drop of -38%.

C. In the recession triggered by the COVID-19 pandemic in 2020, the maximum drop of the S&P 500 was -34%, with an average drop of -28%.

So if this time is a recession, then my first bottom fishing point should be after the S&P drops by 20%. Based on the current price of the S&P 500, this would mean starting to bottom fish Bitcoin when it falls below 4,000 points (or 4,400 points).

2. Use VIX as a reference

VIX is equivalent to the panic index for U.S. stocks and is also very useful data. I have mentioned it many times before; generally speaking, a VIX of 30 can be viewed as a pullback, exceeding 50 basically indicates a recession path, and over 80 signifies the peak of a recession. It can be seen that the peaks in 2008 and 2020 both exceeded 80.

So my idea is to start bottom fishing when VIX exceeds 70 (taking the middle value) and continue to buy Bitcoin.

3. Use URPD as a reference

I won't say much about the URPD data as it is monitored daily, and the support for URPD has been validated again in the past two months, including the previously mentioned $BTC 70,000 bottom support which is also valid. Additionally, I do not rule out the possibility of a spike dropping below $70,000, but the range between $70,000 and $80,000 is very likely to be a regular interval during a recession.

So my thought is to start bottom fishing Bitcoin when it drops below $75,000. However, because I am not sure if it will reach this position, I have used the S&P 500 and VIX as references; essentially, whichever of these three arrives first, I will start buying, always averaging down as the price drops.

4. Use Entity-Adjusted LTH-NUPL as a reference

This data has been used recently when discussing $ETH, and it is even more applicable to $BTC, and it has never been wrong. The reason I placed this data last is that I am not sure if even in a recession Bitcoin can be pushed into the red zone. If it can truly enter, this indicator will be my main bottom fishing indicator.

Begin buying when it enters the red zone, buying more as it drops.

Apart from the fourth type of Entity-Adjusted LTH-NUPL data, I cannot be certain that bottom fishing is always the right position, and even with the Entity-Adjusted LTH-NUPL data, it does not guarantee hitting the lowest point. Therefore, if a recession occurs that causes Bitcoin to fall, bottom fishing should also be gradual. These are still just data standards and must be assessed in the context of macro events.

This is just a personal opinion and should not be taken as legal advice.

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