Capitulation buy — buy blood, not a falling knife
The problem
RegimeEdge sizes down — to zero — in high-volatility STRESS, and our trend filter blocks longs in downtrends. That's the discipline that protects capital. But it also means that when a market is selling off hard, the bot does nothing — it sits in cash and waits. Good for not losing money; it leaves the recovery on the table.
The idea
Add one narrow, contrarian entry that only wakes up in a crash: buy when there's blood in the streets — but don't catch a falling knife. Three things must line up:
Blood — price at least 15% below its 200-day average (deep capitulation, not a normal dip).
Fear — the Fear & Greed index in its Extreme-Fear band.
Not a knife — price has already bounced ≥3% off the low (it has stopped falling before we step in).
What the backtest said
BTC + ETH, daily, 2019–2026. The guard is the whole point:
Catching the knife loses (−90%). Waiting for the bounce flips it positive (+58%). Adding the fear filter compounds it (+152%). The edge isn't "buy the dip" — it's "buy the dip after it stops dropping."
What we deliberately checked — and changed
We re-ran it on the 1-hour timeframe the bot trades on. The bounce guard held (win rate 40% → 73%), but the fear filter did not transfer to a short-horizon average. So the signal evaluates blood against the daily 200-day average, where the evidence is strongest — not the intraday one. We changed the design because the data told us to.
Honest caveats
- Live-unproven. Backtested over 7 years and shipped 2026-06-03, but it has not fired live yet. We treat it as unproven until it does.
- It bleeds before it works. In testing, entries routinely drew ~10% against us before resolving — so it runs small, with a wide stop. Capitulations are violent.
- Dormant right now. Bitcoin isn't 15% below its 200-day line today, so the signal is armed but silent. It's built for the next real dump, not this tape.
- One bull-heavy sample. 2019–2026 includes a long bull. It survived the 2022 bear in testing, but a single history is a single history.
Status
Enabled live on BTC/ETH, 2026-06-03. Reversible with a single config flag. When it first fires, the entry, exit, and P&L land on the Track Record like every other trade — win or lose.