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A Complete Guide To Calculating Your Crypto Profit

If you’re a master of numbers, calculating your Crypto profit will become cakewalk.

It is important to remember that the only objective behind investing in Crypto at the moment is making a profit.

For traders, knowing their profit and loss on investments is the most crucial task. However, in this article, we have sorted out the process for you.

Read further to understand how to calculate your Crypto profit.

Word For The Wise…

Cryptocurrencies are a huge part of the world economy, but they’re also incredibly volatile. Just because you bought some Bitcoin in January and made $100,000 doesn’t mean it’ll be worth $100,000 at the end of the year. And just because you lost your entire investment doesn’t mean you should give up on Cryptocurrencies altogether!

Here are some important factors you need to keep in mind when investing in digital assets like Cryptocurrency—

  • When investing in Cryptocurrency, remember that most traders in this business are facing more losses than profits.
  • Cryptocurrencies are extremely volatile.
  • Their lack of real-world use cases often tends to make these investments irrelevant.
  • Follow the thumb rule— never sell your digital currencies at a loss.
  • Keep following the market trends of the coins you invest in. You can predict prices with the following link: coinrevolution.com/price-prediction/.

Profit Calculation Methods For Crypto Investments

Follow the strategies shared below to calculate your profit and loss on Crypto investments—

1. Deduct The Selling Price From The Cost Price

This is the most straightforward procedure for calculating Crypto profit.

The selling price is the price at which you sell your Crypto assets. In general, you can deduct this total amount from your cost to calculate your net profit. However, there are some exceptions to this rule.

In order to qualify as a deduction, the selling price must be equal to or higher than the intrinsic value of your Crypto assets. This indicates the amount it would be worth if it were sold on an open market.

In addition, you cannot claim any kind of tax deductions for any losses on your Crypto investments.

2. Using Unrealized Profit

You can calculate the profit and loss of a Crypto investment using unrealized profit. Unrealized profit is the difference between the market value of your holdings and your cost basis.

To calculate unrealized profit—

  • First, subtract your cost basis from the current value of your holdings.
  • Then, use the difference (the amount you own minus what you originally paid) to figure out how much you could sell for or buy for if you sold today or if you bought today.

3. Find The Profit Percentage Of Your Crypto Investments

You can find out your profit percentage on Crypto investments by taking a look at the numbers. Here are the two major ways you can use to find out how much of your investment you’ve made back—

  • First, take a look at the total number of coins that you own and divide it by the total value of all of them. This will give you a rough estimate of how much money you have made so far on the investment.
  • Second, calculate a return on investment (ROI) using this formula:

[(Total Coins Owned – Total Value) / Total Coins Owned] x 100%

This will tell you how many years it would take for all of your coins to be worth exactly what they are now if nothing else changed about them.

  • Third, multiply your profits by 3% per week until they reach their original value again.

4. Use A Cryptocurrency Calculator

A Cryptocurrency calculator helps you calculate the profit and loss on your Cryptocurrency investments. It is a tool that allows you to do this by calculating the current value of a Cryptocurrency and then comparing it with its price at a certain time in the past.

You can also use the information displayed by these tools to decide whether or not to hold onto your coins for longer.

Conclusion

Cryptocurrency investments are a great way to diversify your portfolio and gain exposure to different markets without having to take on as much risk as other investments like stocks or bonds might require.

However, an estimation of the profit and loss helps investors to understand their performance in the market and make decisions accordingly.

We hope this article cleared some of your doubts regarding Crypto profits and ways to calculate them.

Written by Marcus Richards

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