I see you have done the greatest research, and probably you know how to manage your loss during the crash. For me the best things when the market falls are not to let myself selling the coins and keep them.
It's not the greatest research almost everyone knows what to do at times like this and that is to hold which you also mentioned. No one wants to sell their investment when the price is low except for those who doesn't have any experience with bitcoin's volatility are the ones who would probably give in and sell immediately.
This strategy is not fully false because there is still people doing this because they are an expert and active traders mean while like you said if newbie doing this of course they will turn out to lose more than just his coin. That is why this is not recommended for any newbie who start trading
But I can say this strategy is really work because in crypto world, there is too much volatile which is we can get our profit back in no time. And if you do not want to sell it back then you should do some more deposit equal to what your loss and do trading as well and you will get on both profit
The strategy of OP is not easy to pull off because the price of bitcoin doesn't easily recover by $500 or crash by $500 every day. Imo it could work but not all the time.