Drawdown
How far below its last peak is a market, and why does that number change how a fall should be read?
In plain words
A drawdown is the decline from a previous peak to a later price, shown as a percentage of the peak.
Why it matters
The same percentage fall means different things at different depths. A further fall when a market is already far below its peak removes most of what remains, and getting back to the peak needs a much larger percentage gain than the loss.
In a real week: BTC, week of 7 November 2022
At the close of the week of 7 November 2022, BTC was 75.25% below its 52-week high after a weekly fall of 21.89%. From that depth, regaining the old high would require the price to roughly quadruple.
A common mistake
Comparing percentage falls without noting where they started. A market that halves has to double to get back.