Understanding Crypto ROI: Tracking Your Portfolio Performance

In the emotional rollercoaster of crypto markets, having objective metrics to evaluate your performance is critical. The most fundamental of these metrics is Return on Investment, or ROI.

When markets are pumping, everyone feels like a genius. But if Bitcoin is up 100% on the year, and your portfolio of altcoins is only up 20%, you are actually underperforming the benchmark index.

What is ROI?

ROI measures the efficiency or yield of an investment relative to its initial cost. It strips away the absolute dollar amounts and provides a standard percentage, making it easy to compare the performance of different assets, regardless of how much capital was allocated to them.

The ROI Formula

To calculate ROI: ROI = (Net Profit ÷ Cost of Investment) × 100

For example, if you buy $5,000 worth of Solana and sell it for $12,500, your net profit is $7,500. ($7,500 ÷ $5,000) × 100 = 150% ROI.

Why ROI is Better Than Checking Your Balance

It's extremely easy to look at a portfolio balance, see that it is higher than it was last month, and feel successful. But if that balance is going up simply because you keep depositing new funds from your salary, you aren't actually profitable—you are just saving cash in a new account.

Tracking the specific ROI of individual trades—and your portfolio as a whole—tells you if your trading strategy is actually generating alpha.

The Danger of Nominal Returns vs Real Returns

A major aspect of ROI is comparing it to external factors. If your crypto portfolio yields a 7% ROI over a year, but inflation was 8%, your real purchasing power decreased. You incurred an opportunity cost.

You can instantly calculate your specific trading returns using our dedicated ROI Calculator to keep your portfolio tracking accurate, objective, and emotion-free. When you strip away the dollar values and only look at the percentages, you can refine your strategies much more critically.