Cycle investing: deep drawdowns, DCA lots and principal recovery
Crypto moves in cycles: a long run up, a crash of 70–95%, a slow base, and another run. Cycle investing is a plan for that shape — buy the deep drawdown in pieces, manage every piece, take your money back when it doubles, and let the rest wait for the big wave. This page explains the rules; the Cycle Planner turns them into a plan that updates with the price.
1. Pick very few coins, by how hard they fall
After a cycle top, coins fall by very different amounts. Large caps such as BTC, ETH, SOL and BNB have historically given back roughly 70–80% from the cycle high before building a base. Mid caps have fallen 75–95%. Low caps can fall 90–99% and many never see their old high again — which is why a long-term plan starts from a short list of large and mid caps and treats low caps as out of scope. Your list is yours; the point is that it is short, and that each coin has a reason to be on it.
2. Cycle high and drawdown
Every plan starts from one number: the cycle high, the peak of the last cycle. The drawdown is how far price sits below it:
Drawdown = (current price − cycle high) ÷ cycle high. A cycle high of $5.35 and a price of $1.48 is a drawdown of −72.3%.
The drawdown is what tells you whether you are still waiting, getting close, or inside your buying zone. It says nothing about where the bottom is — price can always go lower than any level you pick.
3. DCA levels instead of one entry
Nobody catches the exact low. A plan spreads the capital over several levels, and usually puts more money lower down: for example 10%, 15%, 20%, 25% and 30% of the capital at drawdowns of −75%, −80%, −85%, −90% and −95%. If price never reaches the deepest levels, that capital simply stays unspent — which is a result, not a failure.
4. Every buy is a lot
An average price hides information. If you bought 1,000 coins at $2.00, 1,500 at $1.50 and 2,000 at $1.00, your average is about $1.39 — but you also know that the first 1,000 coins are the expensive ones. Keeping each buy as a separate lot (price, quantity, cost, date) is what makes the next idea possible, and it lets you trace every dollar through the whole cycle.
5. Recycling a high-cost lot (optional)
Downtrends fall in steps, with sharp rebounds in between. Once you have deployed a good share of the capital — say half — a rebound that climbs back above your most expensive lot gives you a choice: sell that lot, not a slice of everything. Sold at $2.10, the 1,000 coins bought at $2.00 return $2,100. That cash is recycled capital, not new money. If price later falls back to $1.40, the same $2,100 buys 1,500 coins: 500 more than you sold, without adding a dollar.
Two honest warnings. The market does not have to give you the second dip — if price keeps rising after you sell, you hold fewer coins than before. And recycling can quietly turn a long-term plan into trading. The Cycle Planner guards against that: it recycles only a lot that cost at least 10% more than your other lots, only one lot at a time, never sells again below the price of its last recycle, and the whole feature can be switched off (Simple Buy & Hold mode).
6. Principal recovery at 2×
When the position is worth twice the capital you actually put in, many long-term investors take that capital back. Put in $10,000, position worth $20,000: sell $10,000 worth of coins. The capital you contributed is back in your pocket, the remaining $10,000 of coins keeps riding, and the money you have at risk in the plan is now zero. That is not "free money" — the remaining coins can still fall to almost nothing — but it changes how a crash feels and how long you can wait.
Which coins do you sell? Selling the highest-cost lots first keeps your cheapest coins for the longest part of the ride.
7. Take profit where the plan says, not where the mood says
The whole point of waiting for a 70–95% drawdown is to aim for the large moves of the next cycle — roughly 5×–8× the bottom for large caps and 6×–10× the bottom for mid caps — rather than selling everything after +30%. A take-profit ladder writes that down in advance and is sized to what you need the money for: for example 30% at 6×, 40% of what is left at 8×, the rest at 10× — or, if your goal needs less, sell only part and keep the rest. These are your targets, not forecasts; cycles differ and a coin may never reach them.
8. The numbers that matter
- New capital deployed — money you added. Recycled cash — money from a recycled lot, waiting to rebuy. Never add the two together as "capital".
- Average entry — the average cost of the coins you hold now. Effective cost basis — (new capital − cash taken out − recycled cash) ÷ coins held; after principal recovery it can be zero or negative.
- Net capital at risk — new capital, minus cash taken out, minus recycled cash waiting. Realized / unrealized PnL — per lot, so every sale knows exactly which coins it sold.
The risk that no plan removes
A drawdown plan assumes the coin survives and a new cycle comes. Projects fail, exchanges fail, and a large cap of one cycle can be a mid cap of the next. Keep the list short, keep each coin's share of your savings small enough that a 95% fall does not change your life, and treat every level and target as an assumption you revisit, not a promise.