"Buy every dip." This is the core advice from Strike CEO Jack Mallers, who predicts that with quantitative tightening concluding and rate cuts and stimulus anticipated, a significant injection of liquidity is imminent. Mallers argues that the U.S. economy cannot sustain falling asset prices, which will likely lead to a substantial influx of capital aimed at bolstering market values.
While terms like "buy the dip" and "dollar-cost averaging" have become popular among retail investors for acquiring assets at low points or making regular purchases, these concepts are rooted in strategies employed by seasoned professionals. Samar Sen, senior vice president and head of APAC at Talos, an institutional digital asset trading platform, explains that institutional traders have utilized these principles for decades to strategically manage their market entry points and gradually build exposure, thereby mitigating emotional decision-making in volatile environments.
Institutional Strategies for Market Dips
Treasury companies such as Strategy and BitMine have emerged as prominent examples of institutions actively buying during market downturns and employing dollar-cost averaging (DCA) on a large scale, consistently accumulating assets.
Strategy added another 130 Bitcoin (BTC) to its holdings on December 1st, while analyst Tom Lee acquired $150 million worth of Ether (ETH) on December 4th, prompting Arkham to note, "Tom Lee is DCAing ETH."
However, the perception that these sophisticated investors are constantly monitoring screens and reacting to every market decline is not entirely accurate.
Samar Sen clarifies that while institutions may not use the same vernacular as retail investors, the underlying principles of disciplined accumulation, opportunistic rebalancing, and insulation from short-term market noise are integral to their approach to assets like Bitcoin.
The key distinction, he emphasizes, lies in the execution. Retail investors often react to headlines and price charts, whereas institutional desks operate within "structured, rules-based and quant systematic frameworks."
Asset managers and hedge funds leverage a combination of macroeconomic indicators, momentum triggers, and technical signals to articulate a long-term investment thesis and "identify attractive entry levels." Sen elaborates:
A digital asset treasury (DAT) desk may reference cross-venue liquidity data, volatility bands, candlestick patterns, and intraday dislocation signals to judge whether weakness is a genuine mean-reversion opportunity. These are the institutional equivalents of “buying the dip,” but grounded in quantitative statistical truths rather than impulse.
Furthermore, while retail DCA typically involves purchasing a fixed dollar amount at regular intervals, institutions approach gradual exposure building through "execution science." Instead of placing periodic market orders, they utilize algorithmic strategies designed to minimize market impact and prevent the signaling of their trading intentions.
In all cases, institutional strategies are shaped by defined mandates concerning risk, liquidity, anticipated market impact, and portfolio construction, rather than being driven by social media trends or speculative momentum.
Understanding Market Drops: Institutional vs. Retail Responses
Contrary to the appearance of real-time market reactions, institutional approaches are far more deliberate. Samar Sen explains that quantitative-driven funds employ statistical models to distinguish between temporary price dislocations and genuine market reversals.
Consequently, while retail traders might respond to calls to "buy the dip," institutional reactions to market downturns are structured, signal-driven, and "governed by pre-defined processes."
For retail investors seeking to emulate institutional best practices in DCA and dip buying, Samar Sen offers key principles. The most crucial step is to define investment exposure upfront, before market volatility escalates. Institutions establish their target allocations and desired cost bases prior to significant market movements to prevent emotional responses to news events.
The second principle involves separating the investment decision from the execution decision. A portfolio manager might decide to increase exposure, but the actual trading is executed systematically through strategies that spread orders over time, seek liquidity across different venues, and aim to minimize market impact. The core idea, even at the retail level, is to first determine what assets to own and then carefully plan the acquisition process.
Finally, institutions conduct post-trade analysis to assess execution performance, identify slippage, and determine areas for improvement. Therefore, to accumulate assets effectively, one should:
Set your rules early, execute calmly, and evaluate honestly — you will already be operating much closer to institutional best practice than most.