How to calculate annualization of Bitcoin

According to the content of the article, the annualized return on Bitcoin is calculated as follows: Determine the initial investment amount: Record the amount of investment you made when purchasing Bitcoin. Calculate your return: Calculate your return by subtracting the initial investment amount from the current Bitcoin value. Convert to annualized return: Divide the return by the initial investment amount and multiply by 100% to get a percentage return. Adjust the investment horizon: If your investment horizon is less than one year, divide the percentage by the number of days and multiply by 365 days to get the annualized rate of return. For example, if you buy Bitcoin for $20,000 and the present value rises to $25,000 and the investment horizon is 180 days: Gain = $25,000 - $20,000 = $5,000 Percent gain = ($5,000 / $20,000) * 100% = 25% per year Return = (25% / 180 days) * 365 days = 61.67%

Calculation of Bitcoin annualized return

The annualized rate of return of Bitcoin can be calculated by the following formula Calculation:

Annualized rate of return = (current market value - initial investment amount) / Initial investment amount* 100%

Detailed calculation steps:

1. Determine the initial investment amount: Your initial purchase of Bitcoins The amount of coins spent.
2. Determine Current Market Cap: Calculate the value of Bitcoin based on its current market price.
3. Calculate return: Subtract the initial investment amount from the current market value to get your return.
4. Divide by the initial investment amount: Divide the income by the initial investment amount to get the ratio of income to principal.
5. Multiply by 100%: Multiply the ratio by 100% to convert it to a percentage to get the annualized rate of return.

Example:

Suppose you purchased 1 Bitcoin in January 2021 for $30,000. As of January 2023, Bitcoin’s market cap is $20,000. return rate = (-$10,000) / $30,000* 100% =

-33.33%

• In this example, since the market cap of Bitcoin is less than the initial investment amount, your annual If the return rate is negative, it means that the investment has lost 33.33%.
• Influencing factors:
• Bitcoin’s annualized rate of return is affected by the following factors:

Market fluctuations:

Bitcoin’s price is highly volatile, which affects annualized returns.

Holding time:

The longer the holding time, the more accurate the annualized rate of return.

• Initial investment amount: The initial investment amount will affect the percentage of annualized return.

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