As all bitcoiners know, bear markets are gigantic opportunities to stack cheap sats. But even if you know this, you might still squander the opportunity in one of the following ways:

1) Using Leverage

"If bitcoin falls to $40k, I'm going to take out a second mortgage for this generational buying opportunity!"

If this is you, please read this section carefully. Every time there is a bear market in bitcoin, the people who got sucked in at bull market highs because of FOMO are usually the first ones to get desperate in bear markets. They just bought the top and now they're trying to catch the falling knife on the way down.

Do not mistake this coping mechanism for diamond hand conviction. If you use leverage to buy bitcoin, most of the time you will get destroyed. Why? Because despite all hopeful claims to the contrary ("this time is different!"), bitcoin remains one of the most volatile major assets in finance. Huge volatility and multi-year low prices will cause you major stress as you struggle to add collateral during downswings you thought weren't going to happen. All when you could have just kept buying spot bitcoin, totally stress-free.

Want to know what happened last time? I detailed my personal account of the FTX collapse-driven bitcoin bear market in Daily Stack #1: Bear Market Thoughts - Flashback to 2022 (can check that out in my subreddit if you wish; I don't want to link it here out of respect for this subreddit's rules).

2) Panic Buying for Small Dips

If your plan is to throw all your spare cash into bitcoin whenever there's a red day, you'll be out of cash by the end of this week (or sooner). Now, that's not the worst thing in the world (at least you stacked some sats), but here's the key thing you're missing:

During bitcoin bear markets, your spare cash is basically a call option on other people's fear.

To explain this for the non-finance natives out there, a call option gives you the right (but not the obligation) to buy an asset for a specific price (the strike price). People use call options if they think the price of an asset will go way up past their strike price in the future, so when it does they can exercise their call option to acquire the now expensive asset at a huge discount to its market price.

Your spare cash is basically doing the same thing for you during a bitcoin bear market. Most people think as soon as we have a 5% drop, they have to panic buy the dip because it might never drop that much again. But panic buying every 5% drop is the same as betting that this bear market will be different from all five of the previous bear markets. "This time will be different" has a very bad track record in bitcoin's history.

3) Waiting for the "Perfect Bottom"

Let's be clear: panic buying for small dips could be inefficient, but not buying at all could be an even bigger mistake. Bitcoin's immense volatility can surprise everyone in either direction, up or down. So, the most logical approach is to set a small recurring purchase (known as dollar cost averaging or "DCA" for short) and keep some dry powder in case there's another true market panic and bitcoin falls to unthinkable levels.

That's when you can exercise your call option on other people's fear and get the most sats possible.