Question 1

How is crypto profit calculated?

Accepted Answer

Crypto profit = (Coins × Sell Price) − Investment Amount − Trading Fees − Taxes. The number of coins you own equals your investment divided by the buy price. Your gross profit is the difference between sell value and buy price, then subtract fees and applicable taxes for your net after-tax profit.

Question 2

What is ROI in cryptocurrency?

Accepted Answer

ROI (Return on Investment) measures your profit as a percentage of your initial investment. Formula: ROI = (Profit / Investment) × 100. A 100% ROI means you doubled your money. Crypto ROI can be extremely high or negative, reflecting the asset class's high volatility.

Question 3

How are crypto gains taxed in the US?

Accepted Answer

In the US, cryptocurrency is treated as property by the IRS. Short-term gains (held less than 1 year) are taxed as ordinary income (10–37%). Long-term gains (held more than 1 year) are taxed at preferential rates (0%, 15%, or 20%). Always consult a tax professional for your specific situation.

Question 4

What are typical crypto trading fees?

Accepted Answer

Major exchanges like Coinbase charge 0.5–1.5% per trade. Binance charges 0.1% (or 0.075% with BNB). Kraken charges 0.16–0.26%. Decentralized exchanges (DEXs) charge 0.3% plus gas fees. Fees significantly impact profitability on smaller trades.

Question 5

What is the break-even price?

Accepted Answer

The break-even price is the minimum sell price needed to recover your investment after fees. It's slightly above your buy price because you pay fees on both the buy and sell transactions. If you buy at $30,000 with 0.1% fees on each side, your break-even is approximately $30,060.

Investment Amount	$1,000.00
Coins Purchased	0.033333
Sell Value	$1,666.67
Gross Profit / Loss	$666.67
Trading Fees	−$2.67
Net Profit (after fees)	$664.00
Tax Owed	−$132.80
After-Tax Profit	$531.20
Break-Even Price	$30,060.00

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