Bitcoin volatility can never be avoided, but panic can be avoided with the right strategy and education. As you say, 'Investing by understanding your financial situation will reduce panic'. Yes, investing by understanding your financial situation reduces panic, but no matter how good the financial situation is, when the market price drops, some anxiety acts and the panic does not go away completely. And this is more the case with new investors. In this case, the DCA strategy is good to avoid panic. It protects against market fluctuations by investing regularly and systematically and helps to focus on long-term planning. As a result, the investor learns to remain calm without panicking.
For newbie to avoid panic when the market drops, they should only invest with little amount of money as low as $10 and above so that whenever there is a dip, they wouldn't panic but continue with their ongoing weekly DCA and be learning at the same time. With time as they continue investing and having experience of the market that if there is a dip, the price of bitcoin will bounce back. That will build their confidence the more. After one- or two-years investing experience and good confidence on bitcoin, they can increase their DCA amount and invest aggressively to cover up all those period that they lacked confidence in bitcoin.75
You are not putting it the right way Mr Merits because being a newbie in this forum and to Bitcoin does not in any way mean that the person is of low income. A newbie that have built a good financial status and can confidently put $10,000 in Bitcoin without fear should be encouraged to start right and not invest $10 just because he is a newbie and is expected to be afraid of losing money. The right way for us to counsel newbies is to ensure they work out what their discretionary income is from where they can invest part of it into Bitcoin and the keep part as emergency funds and any other thing they might want to do with money so they will not temper with their invested funds.
Because of these confusions, I usually go straight to teaching newbies the DCA, method which they must do with their discretionary income only and must set their mind to minimum of 10 years before appraising their investment for profits. This method saves everybody the stress of fear of dips, consolidation and what have you.