If someone has not understood this or, even worse, believes that it is not true, they should refrain from playing on this market until they understand it.
Bull Trader Jr
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When there is a drop, is it the same value when it rises?
No, when a value drops by 50% and then rises by 50%, it does not return to its original value. This happens because the percentage increase is applied to a smaller value after the drop. Let's explain with an example:
### Practical Example: Suppose you have an investment of R$$ 100.00.
1. 50% drop: - If the value drops by 50%, you lose half the value. - Calculation: ( 100 - (50% times 100) = 100 - 50 = 50 ). - New value: R$$ 50.00.
2. 50% increase: - Now, if the value increases by 50%, the increase is calculated on the new value (R$$ 50.00). - Calculation: ( 50 + (50% times 50) = 50 + 25 = 75 ). - Final value: R$ 75.00.
### Why does this happen? - 50% drop: Reduces the value by half. - 50% increase: Increases the current value (which has already been reduced) by 50%, which does not compensate for the initial drop. Mathematically, a drop of ( x %) followed by an increase of ( x %) does not return to the original value. To return to the original value after a 50% drop, an increase of 100% (double) over the reduced value would be necessary.
### Conclusion: - 50% drop + 50% increase: Does not recover the original value. - To recover the value after a 50% drop, an increase of 100% is necessary. Therefore, in cryptocurrencies (or any investment), it is important to understand that percentage drops and increases are not symmetrical in terms of their impact on the total value.
source: deepseek
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