Bitcoin maximum drawdown8/28/2023 ![]() ![]() Which is why managing drawdown, especially for cryptocurrency hedge funds is so significant. The common definition of drawdown of a portfolio is the percentage loss of current wealth (W t) from a prior all-time high (M t) and can be expressed as DD t = 1 - W t / M t.īecause media attention tends to focus purely on the profit potential from cryptocurrencies when they are rising, it is important, especially for cryptocurrency hedge funds geared for long term survivability, to consider the drawdown risks and manage those accordingly.Ī portfolio’s downside risk of a prolonged drawdown matters not only to the investors’ financial wellbeing, but also to an investment manager’s business survival in the immediate term. Yet it is also a critically important measure for investment management. The sort that ought only be repeated in hushed whispers and kept away from polite conversation. In the fund business, “drawdown” is a dirty word. In this article, Patrick Tan, CEO of Novum Technologies, explains why cryptocurrency investment drawdowns have become so important and adapts traditional drawdown minimisation techniques to the nascent cryptocurrency market. ![]() Have you been paying attention to your drawdowns? If you’re managing cryptocurrency hedge funds, monitoring your drawdown risk can make a big difference to your business’ survival. ![]()
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