How drawdown from an all-time high is calculated
Drawdown measures how far an asset has fallen from its highest recorded price. It is the single most direct answer to the question 'how bad has this been', and unlike a return figure it does not depend on when you happened to buy. The all-time high is the reference point, and the drawdown is the percentage gap between it and the current price.
The number that matters more, and that almost everyone underestimates, is the gain required to get back. Losses and recoveries are not symmetric, because a percentage loss is taken on a larger base than the percentage gain that reverses it. A 50% fall does not need a 50% rise to recover — it needs 100%.
This asymmetry gets brutal quickly, and it compounds against you: each additional slice of decline demands disproportionately more of the recovery. It is the arithmetic reason that avoiding a deep drawdown matters more than capturing a gain of the same headline size, and it is the sort of thing far better understood before taking one than during it.
Worked example
An asset that peaked at 69,000 and currently trades at 42,000, followed by the recovery table — the part of this page worth remembering.
| Input | Value |
|---|
| All-time high | 69,000 |
| Current price | 42,000 |
| Drawdown | 39.13% |
| Gain needed to recover | 64.29% |
| Down 20% | needs +25% |
| Down 50% | needs +100% |
| Down 80% | needs +400% |
| Down 90% | needs +900% |
Read the last three rows together. Going from a 50% drawdown to an 80% one feels like losing another 30 percentage points, but the recovery requirement moves from 100% to 400% — and a 90% drawdown needs a ninefold rise. This is why capital preservation and position sizing do more for a long-run result than picking the right entry.
How to use this calculator
- Use the genuine all-time high across all venues, not the high of the period you happen to be looking at, or the drawdown will be understated.
- Enter the current price to see both the drawdown and the recovery requirement side by side.
- Compare the drawdown across the assets you hold — a portfolio-wide 40% and one asset at 85% are very different problems.
- Check the recovery figure against a realistic time horizon: a 400% gain is not impossible, but assuming it arrives soon is a decision, not a forecast.
- Re-run against your own average buy price as well, since your personal drawdown is usually smaller or larger than the drawdown from the all-time high.
Frequently asked questions
Why does a 50% loss need a 100% gain to recover?
Because the two percentages are taken on different bases. Falling 50% from 100 leaves 50. Rising 50% from 50 returns only 75. To get back to 100 from 50 you need to double, which is a 100% gain. The deeper the fall, the smaller the base the recovery has to work from.
Is a large drawdown a buying opportunity?
Not by itself. A price being far below its previous peak says nothing about whether that peak was justified or whether it will ever be reached again. Plenty of assets have fallen 90%, then fallen another 90% from there. Drawdown describes what happened, not what happens next.
What is the difference between drawdown and maximum drawdown?
Current drawdown measures the gap from the peak to today's price. Maximum drawdown is the largest peak-to-trough decline ever recorded, whether or not the price has since recovered. Maximum drawdown is the better measure of how much pain holding an asset has historically required.
Should drawdown be measured from the all-time high or my entry price?
Both, for different purposes. Drawdown from the all-time high describes the asset. Drawdown from your average buy price describes your position. If you bought after the peak, the asset's drawdown will look far worse than your own; if you bought at the top, they are the same.
How large are crypto drawdowns typically?
Historically much larger than in equity markets, with major assets having repeatedly fallen well over 70% from a peak and smaller tokens frequently doing worse and not recovering. Rather than assuming a typical figure, size positions so that a drawdown of that magnitude would be survivable.
Does a stop-loss avoid this problem?
It caps the drawdown, which caps the recovery required — that is the arithmetic argument for one. The trade-off is that stops get triggered by volatility that later reverses, and in thin crypto markets a brief wick can execute a stop at a far worse price than intended.
This calculator is an educational tool. Results are estimates based on the inputs you provide and do not constitute financial advice. Verify figures with your bank, broker or a qualified advisor before acting on them.