Monthly drawdown represents the percentage decline from a peak value in an investment portfolio or asset’s price within a calendar month. It quantifies the largest peak-to-trough drop in value during a specific 30-day period, before a new peak is achieved. This metric is a key measure of risk, indicating the maximum loss an investor would have experienced if they had bought at the peak and sold at the lowest point of that month. It provides a historical view of investment volatility and capital preservation.
Context
In crypto investment analysis, monthly drawdown figures are frequently reported to assess the risk and volatility characteristics of various digital assets and investment strategies. News often compares drawdowns across different cryptocurrencies or portfolios to evaluate their resilience during market corrections. Understanding monthly drawdown helps investors gauge potential capital at risk and adjust their exposure in highly volatile digital asset markets.
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