Introducing the Bitcoin Drawdown Calculator. This tool can help investors understand the potential downside risks associated with a Bitcoin investment by calculating the maximum drawdown and drawdown periods within a selected timeframe. Either graph the output, or display a drawdown period table.
Using the Bitcoin Drawdown Calculator
To effectively use this tool to analyze drawdowns in a Bitcoin investment, follow these steps:
- Starting Date: Enter the date from when you want to start analyzing drawdowns.
- Ending Date: Enter the date until when you want to analyze drawdowns.
- Calculate: Click the Calculate button to view the maximum drawdown and specific drawdown periods, and draw a graph of Bitcoin's price along with an overlaid chart showing drawdowns from peak.
- Show Drawdowns: Click the Show Drawdowns button to display a detailed table of all significant drawdown periods.
It will include Bitcoin's peak and trough value and date, the percentage drawdown between the two, and the annualized daily volatility during that drawdown period. It only shows drawdowns of 30 or more days.
Understanding drawdowns is important. They measure the drop from peak to bottom in the value of a portfolio, thus providing insights into the potential risk and volatility of Bitcoin investments.
Special Features
The Bitcoin Drawdown Calculator offers a few unique features:
- Maximum Drawdown: Calculates the largest percentage drop in investment value over the specified period. You'll see this if you hit the Calculate button.
- Drawdown Periods: Identifies specific periods where significant drawdowns occurred, helping you understand the duration and severity of investment declines. This is a feature of the Show Drawdowns button.
- Volatility: Computes the annualized volatility based on daily log Bitcoin returns during the drawdown periods in the table..
- Interactive Graphs: Visualize drawdown dynamics with interactive charts that highlight drawdowns from the previous high at a date, along with the Bitcoin value.
Methodology and Data Sources
The calculator uses historical price data for Bitcoin from CoinGecko as well as historical bitcoin return data from Bitcoinity. I also built a Bitcoin Investment Calculator, a Bitcoin Daily Moving Average Calculator, a Bitcoin to USD tool, and USD to Bitcoin calculator.
Disclaimer
While we strive to provide accurate and up-to-date information, the results from this calculator are for informational purposes only and should not be considered financial advice. Past performance is not a guarantee of future returns. Always conduct your own research and consult with a financial advisor before making investment decisions.
We hope this tool aids you in making informed decisions about your Bitcoin investments. For more financial tools, check out our Investing category page.
