I know this may sound pretty obvious to most of us, but still this simple math fact is overlooked by many, especially new investors. This fact is very relevant in the context of the recent market dip and the current recovery we see.
Let’s assume you bought a particular coin at the price of $100. If the market falls by 20 % you will be left with $80. The market starts recovering and your assets starts to grow but this time in order to have your initial investment it will need a 25 % rise to get back to $100. The price might fall with 20 % but it should jump by 25 % not by 20% to break even.
$100 – 20 %($20) = $80
$80 + 20 %($16) = $96
$80 + 25%($20) = $100
Happy investing! Don’t buy high and sell low.