How To Calculate Bitcoin Profit In 5 Easy Steps
Becoming a part of the whole cryptocurrency industry is a decisive step that more and more people decide to take. Although most of the still have a lot of questions and uncertainties in their minds about it, they are more willing than ever to join millions of others and invest money in digital currencies. As the most popular and valuable virtual currency, bitcoin leads the way when it comes to how many people own it and choose it as their main crypto. Diversifying ones portfolio is a must since keeping all of your eggs in a single basket is not advised, but still the largest chunk of an average investors balance tends to be in bitcoin.
Considering this fact, new investors and enthusiasts usually do not think twice about which crypto to support out of the gates. They first purchase or otherwise acquire an initial amount of BTC and then later branch out into others until they find what works best for them. However, one important question lingers in their minds during all of that time, and that is how they can calculate their bitcoin profit. Is something like this even possible and if it is, what is the easiest way to do so? You will be happy to know that it is more than possible to calculate the bitcoin profit at any point and in this article we will tell you how. If you wish to learn more about all of this, make sure to check out technologywire.net.
Losses From Hacks & Thefts
Losses on cryptocurrency investments due to scams, hacks, or other thefts are not treated as casualty losses, but instead, as investment losses.
According to tax code 165 , even though the investment is not linked to any business, your investments have been put in for profit. This is why any loss that has occurred as a result of scams, theft, or fraud is tax losses. But how can you claim such losses when filing taxes?
Crypto losses as a result of hacks and theft can be claimed as $0 proceeds transactions on Form 8949. This implies that if you paid $15,000 for 1 ETH and it was taken as a result of an exchange breach, you might claim a loss of $15,000.
How To Calculate Cryptocurrency Trading Profits In 2021
When dealing with any type of cryptocurrency you will want to do the math beforehand and calculate your profits. The process in itself is not too complicated since you have to make a couple of steps and do manual calculations. On the other hand, there are also some of the best trading profit calculators that can do the job for you. Keep on reading and understand how to calculate crypto and make profits in 2021.
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Calculate Crypto Profit Binance: What Are The Types
When it comes to trading digital currencies, technology is a bit different from forex trading with fiat money. However, some factors are quite similar. That is, more and more people wonder how to calculate crypto profit Binance.
A forex trader deals with historical and future exchange rates of certain currency pairs and wants to make the most accurate value forecast. Same thing here, an investor or crypto trader must be able to calculate overall crypto profit from cryptocurrencies chosen.
This applies when buying cryptos for fiat money, when trading currency pairs or when buying lesser-known digital currencies for coins with high market cap, such as Bitcoin or Ethereum.
Why Use A Percentage Return Calculator
When you suffer a trading loss it always hurts a little. These losses might actually be worse than you initially suspected. We’ve put together a table comparing percentage loss and the subsequent percentage return needed to get back to where you started.
The biggest takeaway from the table is that percentage loss does not equal the gain percentage needed to get back to where you started.
We can see that the more you loose the greater the percentage return required to get back to break-even. If you invested in bitcoin and lost 5%, you would now need to make 5.26% to get back to where you started. Let’s say however you jumped into the altcoin markets and lost a whopping 90% on a coin. You would need to now make 900% to get back to where you started. These kinds of losses show the importance of position sizing and stop-losses.
Let’s do a more specific example, you got into the bitcoin markets and bought some at $50,000 and sold at $35,000. You just lost 30%. To get back to $50,000 however, you need to make 42.86%. Specifically, that’s 12.86% extra you now need to make than what you lost.
The idea of cutting your losses short is to not let your return to break-even get too out of control on any one position. Risking large amounts of capital on any one crypto trade could unexpectedly destroy an entire portfolio.
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Compare Crypto Tax Trackers
A cryptocurrency tax tracker can help you determine the best way to file your crypto taxes. Factors like crypto losses, how long you hold your crypto and your income level all impact your tax bill. A crypto tax tracker can not only help you get all your trades in order, which may make filing your crypto taxes easier.
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Dash coin mining profit calculator. Results from mining calculator are estimation based on the current difficulty block reward and exchange rate for particular coin. If you are unsure how profitable mining Dash crypto currency can be this calculator is for you. Dash Mining Calculator Summary.
All in all make use of Dash mining calculator and put the valid information like mining hardware and cost of electricity. Live Marketplace Pricing Compatible Pools Crypto Countdown new. 16 Aug 2021 715.
Dash Mining Profitability Calculator. Mining calculator yespower yespowerr16 cpupower and yescrypt. Simply fill out your hashing power also known as hash rate any pool fees you many have to pay power usage.
Enter additional info such as electricity price hardware costs etc. Input the number of plots hard disk space that you would like to dedicate and the calculator will give you an overview of your estimated earnings and suggested hardware. Dash is a form of digital currency similar to Bitcoin Litecoin and other industry competitors.
The calculator fetches price and network data from the internet and only requires the hash rate speed of mining from the user. Block reward is fixed at 267902358 DASH but only 133951179 50 is POW. Crypto Mining Calculators for Bitcoin Etheruem Litecoin Monero Zcash and 200 more.
One way to do so is to expand outward from Bitcoin to finding other cryptocurrencies in which mining is profitable. Select a cryptocurrency to start using a mining calculator.
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Subtract The Selling Price From The Cost Price
This is one of the simplest ways to calculate your profit and loss in crypto. All you have to do is to remove/subtract the amount you sold the crypto for from the amount you bought it for.
Let us cite an example using Bitcoin . Let us assume that Bitcoin is currently trading at $10,000. You bought BTC with $10,000 and sold when it spiked to $15,000.
In this case, you want to remove the cost price from the selling price. That is, you will remove the cost price of $10,000 from the selling price of $15,000. The remainder is your profit.
You can also use the same model to calculate your loss. In this instance, let us say you bought Bitcoin for $10,000. However, it tanked to $8,000 and you were afraid the price would drop even more. So you sold for that price. This means that you lost $2,000.
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How To Calculate Cryptocurrency Profit
Millions of people around the world generate healthy profits from trading cryptocurrency, swapping and exchanging crypto, and mining crypto. One way or another, its a profitable sector and a prosperous industry.
Even with ups and downs that the whole cryptocurrency industry invariably goes through savvy traders usually come out with a profit. One of the main challenges, even for experienced traders, is understanding how to calculate cryptocurrency profits.
Because cryptocurrencies always go up and down, its crucial to diversify a portfolio. It usually makes sense to hold some of the largest and most popular cryptocurrencies, such as Bitcoin , Ethereum , Bitcoin Cash, Ripple, and several others. Alongside these, it makes sense to diversify as much as possible aiming to benefit from new opportunities whenever they come along such as ICOs and IDOs and therefore new coins and cryptocurrencies.
Whether you are buying or selling, trading, swapping, exchanging or mining, its crucial to know how to calculate profits. In this article, we look at the easiest ways to do that, so that you’ve got a clear idea how much profit you have made from every transaction.
How to calculate crypto trading profits
Fortunately, for those buying and selling cryptocurrencies, the basic principles of calculating profits is quite simple. Theres the price you buy the crypto for and the price you sell them.
The profit you make isn’t the full $10,000.
Buy 2 x BTC = $25,000.00
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Taking Fees Into Account
When you sell your crypto, a part of your profits will be spent on fees, and this is another thing to consider. In some cases, they are negligible or low:
- In centralized exchanges like Binance, a trading fee is just 0.1% and lower. However, CEXes are not the best place to store your money, especially in the long-term: there, you dont own private keys from your crypto, and the exchange can limit access to your coins at any time due to maintenance, a hacker attack, etc.
- In case you trade from a non-custodial wallet, youll have to pay a transaction fee to the blockchain of the coin you are selling. Some cryptocurrencies charge very low transaction fees: in Bitcoin Cash, Cardano, or Solana they are always below $1 and sometimes even less than a cent.
- The less often you sell your crypto, the lower fees you pay. This is especially the case for coins with high network fees. For BTC, they can reach $10-$30 or even more. Generally, you wouldnt want to pay so much for small-sized transactions.
Fees are higher in non-custodial wallets when you trade on decentralized exchanges or exchange services like ChangeNOW. DEXes are very handy but they only allow trading assets based on Ethereum, which doesnt work for everyone. In the case of ChangeNOW, fees are usually between 0.5% and 3%, and we allow users to trade assets from different blockchains. ChangeNOW partners with the best liquidity providers so we can pick the best rate at the moment of the exchange.
To Mine Or Not To Mine
Although mining BTC can be a fun & profitable journey, sometimes selling it all may come off as a better and quicker solution, especially if its volatility has changed overnight. In this case, make sure that you think about its mining rig and power consumption in watts. You dont want to spend a fortune not knowing how to handle it all while dealing with an unbearable electricity bill.
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Realized And Unrealized Profit And Loss
All your foreign exchange trades will be in real-time. The mark-to-market calculation shows the unrealized P& L in your trades. The term “unrealized,” here, means that the trades are still open and can be closed by you any time.
The mark-to-market value is the value at which you can close your trade at that moment. If you have a long position, the mark-to-market calculation typically is the price at which you can sell. In the case of a short position, it is the price at which you can buy to close the position.
Until a position is closed, the P& L will remain unrealized. The profit or loss is realized when you close out a trade position. In case of a profit, the margin balance is increased, and in case of a loss, it is decreased.
The total margin balance in your account will always be equal to the sum of the initial margin deposit, realized P& L and unrealized P& L. Since the unrealized P& L is marked to market, it keeps fluctuating, as the prices of your investments change constantly. Due to this, the margin balance also keeps changing constantly.
Different Types Of A Crypto Calculator
- Exchange rate crypto calculator
- Crypto profit calculator for investments
- Special calculator for certain coins like Bitcoin, Ethereum, or Ripple.
Other computing tools with a special focus on a specific cryptocurrency are Bitcoin or Litecoin calculators. In order to be able to determine the success of your own investment over certain time periods, historical rates as well as their development must be displayed.
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Crypto Profit & Loss Trading Calculators
Typically, you need to perform a few simple calculations by hand to calculate your trading profit. For example, when you buy 1 Bitcoin at $40000 and sell it at $50000, you calculate your $10000 profit. But sometimes, you need trading profit calculators to save time when you need to calculate hundreds of transactions with many variables.
Here is a list of calculators that will help you solve this problem.
Which Crypto Tax Accounting Method Is Best For You
Even though LIFO and HIFO can help you shield yourself from paying hefty taxes, FIFO is the most common method among taxpayers.
It must also be noted that if you intend to use the LIFO or the HIFO method for gains calculations, you have to keep a detailed record of all your transactions. Only then you can calculate the gains in a hassle-free manner.
This was all about calculating your capital gains, but what if you incur losses? Letâs explore tax losses and how harvesting those losses can help you minimize your tax obligations.
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Crypto Trading Profit Calculators
It is enumerated that sometimes you need to instantly calculate your trading profits, convert one cryptocurrency to the other one and check the potential earnings from your mining hardware.
How it is possible to do it?
Generally to calculate your trading profit, you need to do a few simple calculations manually. For instance, when you buy 2 Bitcoins at $7.200 and sell them at $9.800, the transaction size is 2 Bitcoins . To calculate your profit, lets take the selling price of $9.800, subtract the buying price of $7.200 and multiply the difference by the transaction size. That primarily makes a profit of $5.200. So professional traders often use trading profit calculators to save time, and here are few solutions you can go for, too.
Best Mechanism by Easy Bitcoin calculator
This reputed calculator is the Bitcoin-only solution, and yet, it offers you with a quick way to calculate your profits. Just like with the previous tool, you need to insert the number of coins, Bitcoins in this particular case, and the buying and selling prices. In contrast to the other calculator, you can also include the fees you incurred. In addition you can also specify strategies, long or short, or calculate the fees only.
It is also learnt that Currexy is splendid way to learn what your Bitcoin investment is worth in several currencies. Just insert how much Bitcoin youve got and view the equivalent of the same amount of money in USD, EUR, GBP, ETH, LTC and Dash.
How To Use The Crypt Return Calculator
This crypto return calculator is designed to show you your percentage gain or loss and also back to break-even. Let’s use a simple example to demonstrate. Keep the Use Crypto Price radio button selected. Set the Enter Initial Crypto Price to 10000. Set the Enter Final Crypto Price to 7000. Click Calculate.
In the above example we can see that if we firstly invested money into a coin with an initial price of $10,000. Then that coin’ price dropped to $7,000. There was a loss of -30%. We would need to gain 42.86% to get back to even.
Thanks for using our tool and good luck with the trading! You might like to check out our Crypto Blog. Our first article looks at .
This post and crypto tool are not intended to be used as general or personal cryptocurrency investment advice. I am not a financial advisor and recommend you consult with a financial professional before making any serious financial decisions.
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Calculate Gains And Losses With Crypto Tax Software
The easiest way to calculate your capital gains and losses is using crypto tax software. Crypto tax software is integrated with major crypto exchanges, blockchains, and wallets, and can help you with reporting and filing your crypto taxes.
At ZenLedger, you can use our crypto tax calculation software to simplify tax reporting and financial analysis in compliance with the IRS and the SEC rules and regulations.
How To Calculate Profit In Cryptocurrency Trading
To get started on calculating your profit in cryptocurrency trading, you must first know your breakeven price. The breakeven price is the price that you bought your coin at. You need to take note of this price to be able to calculate your profit or loss.
Lets use a simple example. Take note that this is only for illustrative purposes and the numbers here are not the actual market prices today.
Say you bought 1 Bitcoin last month for $8,000. This is your breakeven price. When you checked the market today, the price of a Bitcoin already increased to $8,250. Simply subtract the breakeven price from the current price, and you will get your profit.
Subtracting $8,000 from $8,250 will equal to $250. This means that if you sell your Bitcoin today, you will be able to earn a profit of $250. You can then decide if you want to cash out this profit immediately, use it to buy another crypto asset, or leave it to possibly earn more.
This is just a very simple example on how to calculate your profit. Calculations are more complicated if you have several coins in different cryptocurrencies, if you buy and sell regularly, and if you have different price point targets for each crypto asset.
There are other profit and loss metrics that you should also keep in mind when calculating your profit. So not only will you calculate for your total profit, but depending on the targets that you set, you might need to use any of these metrics below.
- Average buy price
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