# How to Calculate ROI of Your Crypto Investment

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# How to Calculate ROI of Your Crypto Investment trade and investing in cryptocurrencies can be challenging at times without proper analysis and bright decision-making. It is imperative to understand how your existing investment performs before making far investment-related decisions. Return on Investment ( ROI ) is a great tool to start. however, there are a few things you need to know when it comes to calculating ROI for crypto.

In this founder ’ south usher, Liquid has explained how to calculate ROI for crypto assets, along with a abbreviated introduction to why calculating return on invested capital matters .

## What Is Return on Investment (ROI)?

render on Investment is one of the measures to evaluate the performance of an asset in the marketplace. As the grocery store is all about buying things when the price is first gear and selling them during price addition, ROI tells us if a market strategy is working or not. If the ROI of a project international relations and security network ’ triiodothyronine good enough, it indicates the want for changing the investing scheme .
Although ROI does not consider as many factors as other market analysis tools do, it clarifies how your asset performs concerning its past performances. For exemplify, when technical foul analysis of an asset will explore how it has endured different commercialize changes over a menstruation. On the other hand, ROI alone pays attention to the tangible profit the asset has produced over time .
Of class, you can not use ROI as the sole template to planning all your investment strategies. Over the period, you need to consider aspects like market risk and excitability. however, if you want to know if the asset has been performing well or not, you can count on ROI. The best separate is that you can use ROI to analyze the performance of traditional assets and crypto-assets .
first, we will see how you can calculate the ROI of a general and moreconventional asset . ## How to Calculate the ROI of an Investment?

The ROI calculation convention should not intimidate you by any luck. It is so simple, and anyone with a basic understand of mathematics can do that .
If
A = The current value of the investment .
B = The original price of the investment .
then ,
ROI = ( A-B ) /B
That is,

ROI is equal to ( Current value – Original cost ) /Original monetary value .
Let ’ s take a more real-life-friendly example to understand what ROI stands for .
Let ’ s say you purchased a real estate property by paying \$ 100,000. After some time, when you think it is the right time, you sold the property for \$ 150,000 .
hera is the thing, though. To keep the substantial estate property in the right way, you may have spent some excess money. Suppose you have paid around \$ 20,000 for regular alimony and repairs of the property. The point is that you have to reduce this come from the current measure of the asset .
indeed, the calculation would be like this :
ROI = ( 130,000 – 100,000 ) /100,000
= 30000/100,000 = 0.3
You see, the current respect has been adjusted after considering the total you have spent on the asset .
After that, the ROI of the investment is 0.3. If we talk in terms of percentages, it means you received a 30 % hark back on this investment. You can besides find the profit from the investment by multiplying ROI by the original cost of the investment .
In this case, that calculate will be 0.3 x 100,000, which is peer to \$ 30,000. As you can see, this visualize is inclusive of the extra money you have spent on the asset so far .

## How to calculate the ROI for crypto?

In the world of crypto assets, you can calculate the Return on Investment by reducing the original price of the crypto asset from the asset ‘s sell price. then, you have to divide the result by the actual cost of the investment .
For model, if you buy some crypto for \$ 5000 and sell it for \$ 20000, the ROI would be 3.0. Meaning you received three times ( 300 % ) your original investment. however, you have to consider a few extra aspects like the transaction fees involved and the overall liquid of the asset .
Considering that moral force transaction fees bind crypto assets, you should besides consider how a lot you pay for the buying/selling work. In early words, a dim-witted ROI figure would not provide you a arrant picture of how the crypto asset performed. If you need such comprehensive data, you need to do more research .

## Why is the return on investment is not enough?

There are a few factors that ROI willfully ignores. From an overall market position, these factors may be necessary. Some of them are :

• ROI calculation does not consider time as a crucial factor. ROI, in general, does not specify the time it applies to. That is why experts and entities come with a concept called annualized ROI, which refers to the progress made within a year.
• While ROI tells us the asset’s performance, it fails to explain the asset’s environment. We cannot know about potential market risks or changes in liquidity. That is why you need more than just ROI to devise a trading strategy.
• The trader may also need additional calculations to understand the precise value of assets, especially when dealing with inflation. Since ROI calculation compares the current price and the original cost, the numbers may not precisely sync with the result.

## Wrapping Up

Despite these shortcomings, you can consider ROI as one of the first base steps to understand whether the asset in question is worth your campaign. however, you have to pay more attention to a few more aspects like liquidity and volatility in crypto assets . 