How long does it take Luna to recover after a liquidation inducing drawdown to pre-smashed the level compared to the size of drawdown?

In order analyse this, we first have to define a drawdown. I'll use the following drawdown metric:

D = the minimum of the next 30 days / current price.

I considered using a 7 day backward average as the denominator, but the position of the drops became misaligned with the local maxima, messing up some of the period calculations. To make evaluating easier, I'm converting it to %change as

D% = (1-D)100

For good measure, as well as for comparison, I also calculate the metric with a 1 day and 1 week forward looking time period.

The longer forward our metric looks, the higher the detected drawdown value. About a 25% cutoff seems to separate the maxima well, therefore I'm finding the local maxima in the D% > 25% intervals and registering the price at that timepoint. Also, as the D% signal is rather noisy, one would find many local maxima if search neighbourhood wasn't broadened, therefore I set it such that no two drops could be found within 2 weeks.

Then, following each drop date we find the next date when the price exceeds the drop price using a cross join. Taking the difference of this date and the drop date, we get the time required for the price to recover.

The drop depths assigned to the first two drops are debatable, as I only searched a month in advance for the minimum (which in these cases was not the true minimum in the recovery period). On the other hand if we look too far for the minimum, we can't really call the price change a 'drop', it would rather be a long tumble.

Conclusions

Within a month peak-to-bottom drops of 25-40% are likely to recover within 40 days. If they were part of a bear market slog, they may take much longer though (over a 100 days), as the long-term downward trajectory also needs to reverse before the local drop can be recovered.

One might consider correcting the price with the long-term moving average to estimate the recovery time of only a drop, without the trend.

Drops over 40% are likely to take around 100 days to recover.