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Complete Guide to Cryptocurrency Investment Calculations

Master cryptocurrency investment calculations with our comprehensive guide covering ROI, risk assessment, portfolio management, and advanced trading metrics.

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Crypto Team
Crypto Team
January 3, 2025
15 min read

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Complete Guide to Cryptocurrency Investment Calculations
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Understanding Crypto Investment Metrics

Cryptocurrency investments require understanding unique calculations and metrics. This comprehensive guide will help you make informed investment decisions using quantitative analysis.

Market Cap

Price × Circulating Supply

Volume

24h Trading Activity

Volatility

Price Standard Deviation

Core Investment Calculations

Return on Investment (ROI)

ROI = ((Current Value - Initial Investment) ÷ Initial Investment) × 100

Example

Initial: $30,000
Current: $45,000
ROI = 50%

Key Points

  • Consider time period
  • Include all costs
  • Account for fees

Risk Assessment

Volatility

Measures price variation over time using standard deviation

σ = √(Σ(x - μ)² ÷ n)

Sharpe Ratio

Risk-adjusted return metric

Sharpe = (Rp - Rf) ÷ σp

Portfolio Management

Asset Allocation

Weight = Asset Value ÷ Portfolio Value
Example

BTC Value: $40,000
Portfolio: $100,000
Weight = 40%

Rebalancing Thresholds
Asset Target Current
Bitcoin 40% 48%
Ethereum 30% 25%
Others 30% 27%

Best Practices

  • Regular rebalancing
  • Risk diversification
  • Market cycle awareness

Monitoring Tools

  • Portfolio trackers
  • Price alerts
  • Auto-rebalancing

Tax Calculations

Important Considerations

  • Trading Events

    Each trade is a taxable event

  • Holding Period

    Long-term vs short-term capital gains

  • Mining Income

    Treated as self-employment income

Capital Gains

Gain = Selling Price - Cost Basis
Example

Buy: $30,000
Sell: $45,000
Gain: $15,000

Tax Rates

Period Rate
Short-term (<1 year) 10-37%
Long-term (>1 year) 0-20%
Crypto Team

Crypto Team

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