When a project in which you are investing for short term gains is dumping a lot it would be logical to convert it into cash . In the unlikely event that you are not able to convert into cash or you wanna keep the money in the crypto then yes opt for some stable coin and then invest back when market hits bottom.
Yes, what you said is a very good solution, because at the moment there are very many traders who store their assets in a stable token in order to protect the value of their assets from falling prices, and that makes the assets in the form of cash too much , because the value of cash is always fixed and does not change as it is altcoin.