Drawdown
The percentage fall from peak to trough — the risk number that matters more than average returns.
Drawdown measures decline from a peak: an asset that falls from $100 to $40 is in a 60% drawdown, even if it later recovers. Maximum drawdown — the worst such fall in an asset’s history — is the single most honest risk statistic, because it’s what a worst-timed investor actually lived through.
Crypto’s drawdowns are structurally deep: Bitcoin’s bear markets have cut 77–84% from peaks, and mid-2026 has it roughly 50% below its October 2025 high. The asymmetry is the killer detail — a 50% loss needs a 100% gain to break even, an 80% loss needs 400%. Position sizing exists because of this math.