Backtesting is the process of evaluating a trading strategy using historical data to determine how effective it would have been had it been applied to a specific time period in the past. In the context of crypto trading, backtesting involves analyzing the performance of a trading model or algorithm against historical prices and volumes of digital assets, such as Bitcoin, Ethereum, and others.

This process allows traders and investors to test and validate their strategies without any real financial risk, as well as providing insight into the potential gains, drawdowns, and risks that may be encountered if the strategy is applied in an actual market.