Combining data from three economic recessions over the past 20 years (2001 internet bubble, 2008 financial crisis, 2020 pandemic)

I have organized four reference indicators, simply put, "four bottom fishing plans, use whichever comes first."

One, look at the U.S. stock thermometer: S&P 500 index

Core logic: The U.S. stock market is like a barometer of the economy; it gets a cold and fever during every economic recession. We observe to what extent it has a fever before entering the market.

  • In 2001, during the internet bubble, the U.S. stock market S&P 500 fell the hardest by 49%, averaging a drop of 22%.

  • In 2008, during the financial crisis, it fell by 57% at its worst, averaging a drop of 38%.

  • In 2020, during the COVID-19 shock, the maximum drop was 34%, averaging a drop of 28%.

My strategy: If there's another recession, and the S&P 500 drops 20% from its high (for example, if the S&P 500 is at 4400 points and drops below 4000 points), I will start bottom fishing for Bitcoin, buying in batches the more it drops.

Two, look at the market panic index: VIX index

Core logic: This index acts like a thermometer of market sentiment; the higher the value, the greater the panic.

  • Value 30: The market is tense

  • Value 50: Entering crisis mode

  • Value 80: Peak of panic

My strategy: Start buying when the VIX surges to 70 (taking the median value). For instance, it broke 80 in both 2008 and 2020. It's like a fire alarm going off, but often the most panic-stricken times are actually opportunities.

Three, look at Bitcoin's floor price: URPD support level

Core logic: This indicator helps us find Bitcoin's "safety cushion", just like the guaranteed price during a mall promotion.

  • Historical case: During the 2020 pandemic, Bitcoin dropped to $7,000 and then rebounded.

  • Current assessment: The current range of $70,000-$80,000 may be the "discount zone" during a recession. If it drops below $75,000 (equivalent to a mall promotion), I will start building positions in batches.

Note: This position may not be broken, but if it is, it's like a limited-time sale at a supermarket, and it's time to act decisively.

Four, ultimate defense indicator: Entity-Adjusted LTH-NUPL

Core logic: This indicator specifically monitors the selling pressure from "long-term holders", similar to observing whether VIP customers at a mall are clearing out their stocks.

  • Red alert zone: When the indicator enters the red zone, it indicates that even long-term holders are starting to panic sell, which is when a true diamond bottom is formed.

My strategy: If this indicator turns red, I will bet all my reserves, but it must meet at least one of the first three indicators (for example, if the VIX has already skyrocketed or the S&P 500 has dropped over 20%).

Ultimate reminder: Three principles for bottom fishing

  1. Diversify bottom fishing; don’t go all in at once. Divide into several portions, buying a part each time an indicator is triggered.

  2. Set a bottom line, for example, start buying if the S&P 500 drops 20%, but buy the most until it drops 40% (leave some bullets).

  3. Stay vigilant; all indicators are not 100% accurate. Pay attention to Federal Reserve policies, wars, and other unexpected situations.