What does the term "Drawdown" mean?

In cryptocurrency trading, the term "drawdown" refers to the decline in the value of assets or capital relative to the previous peak. It is an important metric for investors, as it indicates potential losses that could be incurred as a result of unfavorable market movements. The higher the drawdown, the greater the risk for the trader or investor. Analyzing drawdown helps assess the stability of a strategy and make informed decisions to minimize losses.