Understanding Crypto Profit Calculation
Basic Formula
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Profit = (Sell Price × Quantity) - (Buy Price × Quantity) - Fees
ROI = (Profit / Initial Investment) × 100
`Break-Even Price
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Break-Even = Total Cost (including fees) / Quantity
``Example Calculation
| Bought | Price | Investment | 0.5 BTC$40,000$20,000 | Total | - | $20,050 |
If BTC is now $50,000:
- Current Value: 0.5 × $50,000 = $25,000
- Profit: $25,000 - $20,050 = $4,950
- ROI: ($4,950 / $20,050) × 100 = 24.7%
Tax Considerations
Short-term vs Long-term Gains
- Short-term (< 1 year): Taxed as ordinary income
- Long-term (> 1 year): Lower capital gains rates