For example, if a trader buys a coin at a market price of $10 per unit, and then it falls to $5, he would need that coin value to double (100% increase) in order to return to its initial purchase price. In this case, the breakeven multiple would be 2.
Note that the breakeven multiple is not a percentage, but an absolute number. If we consider the drop percentage of the previous example (75%), the price of that asset would need to increase 300% (4x) to reach $1,000 again.
The breakeven multiple can be easily calculated by dividing the initial price (ATH or buying price) by the current market price:
x = Initial Price / Current Price
Considering our previous example, we would have the following equation:
x = 1000 / 250 = 4
The science of using mathematical theories and computation in order to encrypt and decrypt information.
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