Traditional Investing & Portfolio Theory

What is drawdown in investing?

Drawdown is the decline in an investment's value from its most recent peak to its lowest point before a new peak is reached, usually stated as a percentage. It measures how far a holding fell during a downturn, which helps gauge the depth of loss an investor would have lived through. For example, a portfolio that drops from 100 to 70 has experienced a 30% drawdown. Understanding drawdown matters because recovering from a deep fall requires a proportionally larger gain, and past drawdowns do not predict future ones.

Crypto investments are subject to market risk and volatility. Past performance is not indicative of future returns. This is general information, not investment advice — consider your own circumstances or consult a qualified adviser before investing.