Hype TestedWas buying the dip in the 2022 crash better than holding?
Short answer: Too few results to tell either way.
2022 is the year people say you should have bought every dip. We limited the test to that calendar year to see whether buying the drops actually beat buying on any day.
The rule we tested: Buy Bitcoin after it drops 20% from its 30-day high, hold 30 days. Period: 2022-01-01 to 2022-12-31.
Only 4 independent results, which is too few to tell skill from luck.
| Buying the dip | Holding Bitcoin | |
|---|---|---|
| Total return | -9.4% | -65.3% |
| Per year | -9.5% | -65.4% |
| Worst drop | -9.4% | -66.9% |
| Volatility | +7.9% | +64.0% |
How we tested it
A dip is a close at least 20% below the highest close of the previous 30 days. We buy at the next day's close, hold 30 days, one trade at a time. Each trade is compared with buying on any day of the same period and holding just as long (-7.2% on average), which is the fair test of "the dip is a better time to buy".
Period 2022-01-01 → 2022-12-31. Costs: 0.10% per round trip. Data: Uniswap v3 pool state on Ethereum mainnet, computed by Hype Tested, up to 2022-12-31. Engine 0.1.0.
Trades
| Bought | Sold | Return |
|---|---|---|
| 2022-05-09 | 2022-06-08 | -0.9% |
| 2022-06-14 | 2022-07-14 | -7.4% |
| 2022-09-07 | 2022-10-07 | +1.1% |
| 2022-11-10 | 2022-12-10 | -2.3% |
What this doesn't tell you
- Past results don't predict future results.
- Trading costs are an estimate (0.10% per round trip). Spreads and slippage can be higher, especially for small stocks and crypto.
- Taxes are ignored. Frequent trading usually costs more in tax than buying and holding.
- Crypto prices are computed by us from Uniswap v3 trading pools on Ethereum: a 30-minute average ending at midnight UTC. They are quoted in USDC, a dollar-pegged token that briefly traded near $0.88 in March 2023, and "BTC" is WBTC, a token backed by bitcoin held by a custodian.
- This test covers less than 3 years. Short periods can be dominated by one market mood.
- There are fewer than 30 trades, so luck can easily explain the result.