Price drawdown denotes the peak-to-trough decline in the value of an asset over a specific period, measured as a percentage reduction from its highest point. This metric quantifies the magnitude of a price correction or decline from a previous maximum. It serves as an indicator of asset volatility and risk.
Context
In digital asset markets, price drawdowns are common due to the inherent volatility of cryptocurrencies. Investors and analysts closely monitor drawdowns to assess risk exposure and identify potential buying opportunities following significant corrections. Understanding the historical drawdown patterns of an asset helps in managing expectations and formulating risk management strategies.
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