With the right mindset, to hold against sharp drops in price will not be a problem because the confidence will be there that Bitcoin will always recover.
I agree with everything that you said in your post except the last line (above), and it is problematic to believe that the bitcoin price will "always recover," even if we know historically the BTC price has trended up, and there is no real evidence that the UP trend in bitcoin is going to stop, but it is still not guaranteed to go up. so it is inaccurate to use the term "always" whether you are merely thinking it in your mind or believing that it is actually going to happen that way and that is the reason why you might end up overly leveraging into bitcoin because you wrongly have those beliefs about bitcoin being "guaranteed" to go up.
Don't get me wrong. Bitcoin is likely one of the best, if not the best investments currently available on a widespread basis and to everyone in the world, even though surely some people might not be in a financial and/or psychological position to be able to buy bitcoin, but bitcoin is still available to everyone and is likely a place that everyone should be putting some value and storing it for the longer term of 4-10 years or more.. but at the same time, the amount that anyone puts into bitcoin should be tempered by ongoing thinking that bitcoin is not guaranteed to go up.. even though it remains amongst the best of investments, if not the best investment and individuals are at the same time able to tailor the amount that they put into bitcoin to their own situations.
That is why bitcoin investment should only be on a long-term basis, because to be able to substantially guarantee profits merging it has to take a wide spread of time in between and choosing a 4 to 6+ years time frame could be the best possible approach to doing that,
although we can still take advantage of the occasional market ups and down in between the line, caused by Bitcoin market volatilities, but doing so need a lot of speculative knowledge tools and data that can help you make the best market decision at all time and how much of your funds you chuck out to speculate the price and do a few DCA in between the line.As I said in doing so one needs a balanced physiological state of mind and also a high level of confidence in their decision and DCA analysis, because failure to follow such rules may lead to financial losses caused by bad decisions because of lack of knowledge of the market, but if you just invest in Bitcoin for the long term base, this becomes better and easier to manage than it is with being a market speculator as a beginner.
It is impossible to predict the price movement of bitcoin with even the best market tools because it is just like you predicting what will happen tomorrow and get it right, which we have very slim or no chance to know what will happen next week. If it is possible to use the best market tools to understand the price movement of bitcoin then a lot of traders will make profit, but rather only 10% of traders benefits from bitcoin trade and still the 10% of traders run at lost sometimes. No need for all the worries and waste of time reading charts and following bitcoin price to know what happens because just a slight mistake in your decision, and the market goes opposite, you will regret. Long term investment on bitcoin and buying buying at every week or every month interval through DCA is the best approach and the key to success in your bitcoin journey, if you want to benefit from your bitcoin investment journey. What is worth doing is worth doing well.