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>This looks bad, but I assume that with time the price will recover.

This is a fallacy that leads to holding poor investments. There's an opportunity cost to every dollar invested beyond the drop in price.

You are also running with an assumption that whatever investment they may have used the same funds for, would have netted a gain (or a lower loss). The opportunity cost argument is only valid if in the alternative investment you actually end up in a better spot, that's not a given.

Yeah, especially given that the risk-free rate is currently pretty strongly negative in real terms.

Buying the dip works every time, until it doesn’t.

Can you explain the thought process behind that assumption?

It's a consequence of the Law of Averages. Sometimes things go up, sometimes things go down, but for some reason all things will return to some historical mean often referred to as "reasonable" or "normal."

Historically bitcoin has gone up and down in cycles. There is no reason to think it won't come up again. But I may be wrong as I know very little about crypto.