How crypto profit is calculated
Example
Investing $5,000 at $60,000 per coin with a 0.5% fee buys 0.0829 coins. Selling at $90,000 with another 0.5% fee returns $7,425 — a profit of $2,425 (+48.5%). The break-even sell price is $60,605, slightly above the buy price because of fees.
Fees add up
Exchanges charge trading fees (often 0.1–1.5%), and some add a spread between buy and sell prices. Network (withdrawal) fees can also apply. Frequent trading multiplies these costs.
How crypto is taxed in the US
- The IRS treats crypto as property: selling, trading one coin for another, or spending it is a taxable event.
- Held one year or less: gains are taxed as ordinary income. Held longer: long-term capital gains rates (0%, 15% or 20%).
- Losses can offset gains and up to $3,000 of ordinary income a year.
- Brokers now report crypto sales to the IRS on Form 1099-DA.
Related Asset Trading & Capital Gains Tools
Active digital asset trading requires accounting for transaction friction and tax obligations. Benchmark your crypto gains against traditional equities with our Stock Return Calculator, analyze total capital returns via the ROI Calculator, estimate short-term and long-term tax liabilities using the Tax Calculator, and model long-term portfolio growth with our Investment Calculator.
Frequently asked questions
Why is my break-even price higher than my buy price?
Because fees are taken on both the buy and the sell. You need a small price rise just to recover them.
Does this work for partial sells?
Enter the amount you originally paid for the portion you're selling as the investment. For several purchases at different prices, use your average cost per coin as the buy price.
Are crypto profits guaranteed?
No. Crypto prices are extremely volatile and can fall sharply. Only invest money you can afford to lose.