If you’re tracking the annual change in wealth between two periods, you should try to make sure the start at the end point are either both market peaks or both market lows.
e.g. from 2017 to 2021, or 2019 to Nov 2022 would be valid periods for tracking crypto.
If you instead track from e.g. 2019 to 2021, then you’re probably going to overestimate.
Another option would be to average over periods significantly longer than a typical market cycle (e.g. 10yr).
What does this mean?
If you’re tracking the annual change in wealth between two periods, you should try to make sure the start at the end point are either both market peaks or both market lows.
e.g. from 2017 to 2021, or 2019 to Nov 2022 would be valid periods for tracking crypto.
If you instead track from e.g. 2019 to 2021, then you’re probably going to overestimate.
Another option would be to average over periods significantly longer than a typical market cycle (e.g. 10yr).
Ah, I see. Thanks. It makes total sense.