The largest peak-to-trough decline in an equity curve over the observed period.
Maximum drawdown is best understood as part of a system rather than as an isolated definition. Its related coordinates show the mechanisms, incentives and historical records that give the term practical meaning.
Maximum drawdown describes how participants value, trade or obtain exposure to bitcoin. Market behavior can affect adoption and mining economics, but it does not rewrite consensus rules. Price evidence and protocol evidence answer different questions.
Understanding Maximum drawdown helps distinguish a verifiable Bitcoin mechanism or historical record from slogans, products and market narratives.
For the clearest picture, read this entry together with Portfolio risk, Risk of ruin, Backtesting. The reverse links also lead from Risk of ruin, Portfolio risk.
Linked to related atlas coordinates
Grounded in a source record
Explains function and trade-offs
Part of the open Bitcoin knowledge graph