How CMC Calculates Your Portfolio Profits

Understanding how your cryptocurrency investments are performing is crucial for any investor, whether you're a seasoned trader or just starting out. At CoinMarketCap, we've developed a robust system to calculate your portfolio profits accurately and comprehensively.

In this article, we'll take you behind the scenes of our Portfolio Tracker to explain:

• The key components we consider when calculating your profits
• How we differentiate between realized and unrealized gains
• The formulas we use to determine your overall portfolio performance
• Real-world examples to illustrate our calculation process

We aim to demystify the numbers you see in your Portfolio Tracker, giving you the insights you need to make informed decisions about your crypto investments. Whether you're curious about the math behind your returns or want to understand how to interpret your profit figures, this guide will provide a clear understanding of how CMC calculates your portfolio profits.

Let's dive into the world of crypto profit calculations and uncover the method behind your portfolio's performance metrics.

What is All-Time Profit?

All-time profit is the heart of your portfolio's performance. It answers the big question: "How much money have I made (or lost) on my crypto investments overall?"

Here's what it means in simple terms:

• It's the difference between your portfolio's current value and how much you spent to build it.
• It combines profits from coins you've sold and potential profits from coins you still hold.

Two Types of Profit You'll See

1. Realized Profit: This is money in the bank – profit from cryptocurrency you've actually sold.
2. Unrealized Profit: This is potential profit from cryptocurrency you still own. Remember, it can change with market prices!

How We Calculate Your Profits

We do the heavy lifting for you! Our system carefully tracks all your cryptocurrency transactions and current market data to give you an accurate picture of your portfolio's performance. Here's a more detailed look at how we calculate your profits:

What We Track

1. Purchases: Every time you buy crypto, we record:
• The amount of crypto bought
• The price you paid per unit
• Any fees associated with the purchase
2. Sales: When you sell crypto, we note:
• The amount of crypto sold
• The price you sold it for
• Any fees involved in the sale
3. Current Market Prices: We continuously update the current value of your holdings based on real-time market data.

Calculation Process

1. Average Buy Price:
• We calculate this for each cryptocurrency you own.
• It's the total amount spent (excluding fees) divided by the total amount of crypto purchased.
• This helps determine if you're currently in profit or loss for each coin.
2. Cost Basis:
• This is the total amount spent to purchase cryptocurrency, including buying fees.
• Formula: Sum(Buy Price * Buy Amount) + Sum(Buying Fees)
• We'll be displaying this metric in your portfolio in our next update.
3. Realized Profit:
• This is calculated when you sell cryptocurrency.
• Formula: (Selling Price * Amount Sold) - (Cost Basis / Total Buy Amount) * Amount Sold - Selling Fees
• We sum up all your realized profits from all sales.
4. Unrealized Profit:
• This is calculated for crypto you still hold.
• Formula: (Current Market Price * Amount Held) - (Cost Basis / Total Buy Amount) * Amount Held
• It's "unrealized" because it can change with market fluctuations.
5. All-Time Profit:
• This is the sum of your Realized Profit and Unrealized Profit.
• It gives you an overall picture of your portfolio's performance.
6. P&L% (Profit and Loss Percentage):
• Formula: All-Time Profit / Cost Basis
• This helps you understand your profit relative to your total investment.

A Simple Example

Let's say you:

1. Buy 1 Bitcoin for $10,000 (including a $50 fee)
2. Later buy 0.5 Bitcoin for $6,000 (including a $30 fee)
3. Then sell 0.75 Bitcoin for $12,000 (with a $60 selling fee)
4. The current Bitcoin price is $18,000

Here's how we'd calculate your profits:

• Cost Basis = ($10,000 + $6,000 + $50 + $30) = $16,080
• Average Buy Cost = $16,080 / 1.5 BTC = $10,720 per BTC
• Realized Profit = ($12,000 - (0.75 × $10,720)) - $60 = $3,900
• Unrealized Profit = (0.75 BTC × $18,000) - (0.75 × $10,720) = $5,460
• All-Time Profit = $3,900 + $5,460 = $9,360
• P&L% = $9,360 / $16,080 = 58.21%

Example with Transfers

Let's consider a scenario with transfers:

1. You transfer in 2 BTC when the price is $62,000
2. You sell 1 BTC for $30,000 (with a $10 selling fee)
3. You transfer out the remaining 1 BTC

Here's how it would look:

After selling 1 BTC:

• Unrealized Profit = $62,000 (value of remaining 1 BTC)
• Realized Profit = $30,000 - $10 = $29,990
• All-Time Profit = $62,000 + $29,990 = $91,990

After transferring out 1 BTC:

• Unrealized Profit = $0 (no BTC left)
• Realized Profit remains $29,990
• All-Time Profit = $0 + $29,990 = $29,990

Remember: Transfers in or out don't directly affect profit calculations, but they do impact your current holdings and thus your unrealized profit.

Understanding Average Buy Price

Your average buy price for a cryptocurrency is like your "break-even" point. It's the average amount you paid per coin, considering all your purchases. This helps you quickly see if you're currently in profit or loss for each coin.

What This Means for You

• You don't need to manually track or calculate these figures.
• Our system updates your profit calculations in real-time as market prices change.
• You get a clear view of both your actual gains from sales and potential gains from current holdings.

Remember, while we strive for accuracy, cryptocurrency markets are highly dynamic. Always consider the broader market context when interpreting your profit figures.

Tips for Getting the Most Out of Your Portfolio Tracker

1. Keep it updated: The more current your information, the more accurate your profit picture.
2. Use tags: Organize your investments by strategy or goal to get deeper insights.
3. Check regularly, but not obsessively: Crypto markets can be volatile. Regular check-ins are good, but don't let short-term changes stress you out.
4. Look at percentages: Sometimes the percentage gain tells a better story than the dollar amount, especially when comparing different investments.

Common Questions

While we strive for accuracy, cryptocurrency markets can be unpredictable. Your Portfolio Tracker is a great tool for insights, but it's always wise to do additional research and consider consulting a financial advisor for major investment decisions.