Is there a “right” dip to buy?
“Buy the dip” sounds simple until you have to decide what actually counts as a dip.
In this article, “buying the dip” means making a Bitcoin purchase only after BTC has fallen by a predefined percentage from its previous all-time high (ATH). Unlike regular DCA, purchases are triggered by price drawdowns rather than by a fixed calendar schedule. We tested these two approaches separately in our Bitcoin dip buying vs DCA backtest.
Is Bitcoin 10% below its all-time high cheap enough? Should you wait for 20%? 30%? Or does it make more sense to keep cash available for the really deep 40–50% drawdowns?
There is an obvious trade-off. Buying earlier gives you more opportunities to accumulate. Waiting for a deeper decline may give you a much better entry price, but the opportunity occurs less often — and sometimes may not occur at all.
Instead of trying to answer this theoretically, we tested five simple rules against historical Bitcoin data.
How we ran the test
Each strategy followed exactly the same basic rule: buy BTC when its price is at least a certain percentage below the previous all-time high.
We tested five independent thresholds:
Once a threshold was reached, another purchase could happen after a 7-day cooldown if Bitcoin was still below that threshold.
All tests used daily BTCUSDT candles and the same historical price data. We repeated the experiment over three historical windows ending August 17, 2026: the previous 5 years, 3 years and 1 year.
The deeper the dip, the higher the historical ROI
The result was remarkably consistent across all three periods we tested.
Every step from a shallower threshold to a deeper one resulted in a higher final ROI.
| Buy threshold | 5-year ROI | 3-year ROI | 1-year ROI |
|---|---|---|---|
| −10% | +61.99% | +6.77% | −19.57% |
| −20% | +80.37% | +18.63% | −14.45% |
| −30% | +95.69% | +29.23% | −11.70% |
| −40% | +117.07% | +41.79% | −6.22% |
| −50% | +152.54% | +76.01% | +1.38% |
On the five-year test, the difference was substantial: buying at a 10% drawdown returned 61.99%, while waiting for a 50% drawdown returned 152.54%.
The same ordering remained intact over three years. Even during the one-year period, when most strategies finished in the red, deeper entry levels progressively reduced the loss. The 50% threshold was the only tested level that finished slightly positive.
Portfolio value over 5 years
ROI by Bitcoin drawdown threshold
Buying opportunities by drawdown threshold
Maximum drawdown
Maximum drawdown measures the largest decline in portfolio value from a previous portfolio peak during each backtest.
Waiting for a deeper dip did not automatically mean less risk
The deepest entry threshold produced the highest returns in these backtests, but it did not consistently produce the smallest portfolio drawdown. Over five years, the −50% strategy actually experienced the largest maximum drawdown at −52.05%.
But deeper dips came with a catch
Looking only at ROI makes the 50% threshold appear to be an obvious winner.
It isn't that simple.
The deeper we required Bitcoin to fall, the fewer opportunities the strategy had to buy.
| Buy threshold | 5y purchases | 3y purchases | 1y purchases |
|---|---|---|---|
| −10% | 223 | 122 | 49 |
| −20% | 182 | 85 | 40 |
| −30% | 153 | 62 | 35 |
| −40% | 121 | 43 | 24 |
| −50% | 86 | 19 | 8 |
This becomes particularly clear in the one-year test.
$980 total invested
$984 total invested
To deploy roughly the same amount of capital, each purchase at the 50% threshold had to be more than six times larger than a purchase at the 10% threshold.
And there is another risk that this backtest cannot make disappear: Bitcoin may simply never reach your chosen threshold during a particular correction.
If you wait for −50% and the market reverses at −45%, your perfect entry never happens.
Bitcoin's drawdown history shows how significant this trade-off can be. In our dataset since 2017, only 33% of drawdown cycles reached −30%, while just 22% reached −40% or −50%. See the full Bitcoin drawdown history .
The one-year test shows the trade-off best
The most recent one-year period is useful because Bitcoin ended below many of the prices at which the shallower strategies had accumulated.
| Threshold | Buy size | Invested | Final value | PnL | ROI |
|---|---|---|---|---|---|
| −10% | $20 | $980 | $788.21 | −$191.79 | −19.57% |
| −20% | $25 | $1,000 | $855.50 | −$144.50 | −14.45% |
| −30% | $28 | $980 | $865.34 | −$114.66 | −11.70% |
| −40% | $41 | $984 | $922.75 | −$61.25 | −6.22% |
| −50% | $123 | $984 | $997.55 | +$13.55 | +1.38% |
This does not prove that waiting for a 50% crash will outperform in the future. It shows what happened during this specific historical window: buying progressively deeper drawdowns improved the average quality of the capital that was actually deployed.
So should you just wait for a 50% Bitcoin crash?
Our backtests don't justify that conclusion.
The 50% threshold produced the highest ROI in all three periods we tested, but it also produced the fewest buying opportunities by a wide margin.
A very deep threshold creates a capital deployment problem: you may spend months waiting with cash on the sidelines, and when the opportunity finally appears, you need to invest much more at once if you want to deploy the same amount of capital.
Deep crashes can also take much longer to recover. We measured this separately in our analysis of Bitcoin recovery times after crashes.
Maybe the answer isn't a single dip level
There is another way to look at the result.
Instead of choosing between buying early and waiting for a crash, capital can be distributed across several drawdown levels.
For example, a strategy could begin with a small purchase at −30%, increase the amount at −40%, and deploy even more at −50%.
That avoids making the entire strategy depend on Bitcoin reaching one exact drawdown level while still reserving more capital for deeper declines.
Whether that approach actually improves the trade-off is a separate question — and one worth testing rather than assuming.
What we learned
Across the 1-year, 3-year and 5-year periods in this experiment, waiting for deeper Bitcoin drawdowns consistently produced higher returns on deployed capital.
But the improvement came with an equally consistent cost: deeper thresholds generated fewer buying opportunities.
The 50% threshold was the strongest performer in our historical sample, but calling it the “best” level would ignore the practical problem of waiting for rare crashes and deploying much larger amounts when they occur.
The interesting question may not be how deep a dip should be before you buy — but how much you should buy as the dip gets deeper.
Choosing the drawdown level is only part of a dip-buying strategy. Another question is how often to keep buying if Bitcoin continues falling. We tested that separately in our Bitcoin dip-buying frequency backtest.
Frequently asked questions
What percentage drop counts as a Bitcoin dip?
There is no universal definition. In this experiment we tested drawdowns of 10%, 20%, 30%, 40% and 50% from Bitcoin’s previous all-time high.
Was 50% the best Bitcoin dip to buy?
A 50% drawdown produced the highest ROI in all three historical periods we tested, but it also generated the fewest buying opportunities. That does not mean a 50% threshold will be optimal in the future.
Is buying Bitcoin dips better than DCA?
They solve the accumulation problem differently. DCA invests on a fixed schedule, while dip buying waits for predefined price declines. We compared both approaches using approximately equal invested capital in our separate Bitcoin dip buying vs DCA backtest .
This article is a historical backtest for research and educational purposes only. Past performance does not guarantee future results. It does not include trading fees, slippage, taxes or other execution costs and should not be considered financial advice.