How to read a drawdown.
Bitcoin has fallen more than 75% four times and come back every time. Altcoins often don’t. Understanding the maths of a drawdown is what lets you survive one without selling at the bottom.
What a drawdown is
A drawdown is how far something has fallen from its highest point. If Bitcoin peaks at $100,000 and drops to $40,000, that’s a 60% drawdown — regardless of what price you bought at. It’s the number that tells you how painful the market is right now, and how much has to happen to get back.
Bitcoin’s bear markets
Two things stand out. First, every cycle has had a brutal bear market — if you hold Bitcoin through a full cycle, you should expect to see your position more than halve at some point. Second, the falls have been getting shallower as the market has grown. That’s a pattern, not a promise.
The maths that catches people out
Losses and gains aren’t symmetrical. After a 50% fall you don’t need a 50% rise to get back — you need 100%. The deeper the hole, the steeper the climb back out.
Drawdown calculator
Drag to see what a fall does to £10,000, and what it takes to get back to even.
Altcoins fall further — and some never return
Solana peaked around $260 in November 2021. By the end of 2022, after the FTX collapse, it was near $8 — a drawdown of about 97%. To get back to its high from there, it needed to rise more than 30×.
It did, and that $8 zone is where I was buying. But for every Solana there were hundreds of coins that fell 97% and stayed there. A deep drawdown is only an opportunity in something that survives — which is why I run the five questions in Lesson 3 before buying any altcoin.
What leverage does to a drawdown
With leverage, you don’t get to wait for the recovery. At 10× leverage, a fall of around 10% against you can wipe out the position entirely. Bitcoin has fallen 10% in a single day many times. That’s why my long-term buying is all spot, and why every futures trade I take has a stop and a size I can afford to lose.
How to survive one
- Size for the worst case. Assume Bitcoin can fall 50–80% and altcoins 90%+. If that would force you to sell, the position is too big.
- Keep a cash buffer outside crypto. The people who sell at the bottom are usually the ones who need the money.
- Know your phase. A 30% fall in a bull market and a 30% fall at the start of a bear market are very different things. The Cycle Indicator shows where we are.
- Use the drawdown. Deep drawdowns in serious assets are where a steady DCA plan buys the most.
Drawdowns are normal, deep and asymmetric: a 77% fall needs a 335% rise to recover. Size your positions so you never have to sell in one, and only hold through them in assets you’re confident will survive.
Education only — not financial advice. Figures are approximate and historical. Leveraged derivatives can lose money rapidly and are not available to retail investors in the UK. Cryptoassets are high-risk and largely unregulated in the UK; you could lose all the money you invest. Past performance does not guarantee future results.