The future bitcoin investment calculator is designed to allow investors to calculate the measure of the loss or gain that this investment may generate. This article highlights what you need to know about the bitcoin investment calculator.
The growing popularity of cryptocurrency has seen more and more traders inject money into the digital currency market. Over the past decade, investing in cryptocurrency, particularly bitcoin, has outperformed highly profitable markets, including bonds and stocks. However, investing in bitcoin can be quite intimidating, especially when you are new to the market and cannot keep up with your investment. While some people are intimidated by the technicality of bitcoin investing, most investors see excellent returns on their investment. Investors and traders should understand how to value their bitcoin investment before initiating a transaction, which is why it is fundamental to have a bitcoin investment calculator. This article highlights everything you need to know about the bitcoin investment calculator.
A bitcoin investment calculator is a tool used to establish the value of an investment for a specified length of time. The tool can be used to determine the current value of an investment by checking the rate of bitcoin on a particular date based on the amount entered on the calculator. Instead of spending time figuring out what returns you could have generated by investing in bitcoin on a certain date, the bitcoin investment calculator will come in handy.
Note that a bitcoin investment calculator is not a bitcoin mining calculator. A bitcoin mining calculator is designed to allow traders and investors to measure the profit they will generate from a bitcoin mining activity. This calculator takes into account factors like pool fees, cost of bitcoin, cost of electricity, and bulk rewards. These factors are used to determine the profits that one generates on an annual, monthly, weekly or daily basis.
Unlike the bitcoin mining calculator, the inventors created this simple, powerful bitcoin calculator to allow investors to determine what they might have missed by investing in the past. They can also use the calculator to determine how much an investment will generate over a period of time.
The importance of the Bitcoin investment calculator
The bitcoin investment calculator is useful in a variety of ways including the following;
Establish the historical value of a Bitcoin investment
Most investors want to know how much their investment might have been worth if they had invested earlier. While there is a chance that you may have achieved significant returns on your investment, it is also true that you may have experienced a drop in the value of your bitcoin investment. The calculator will help you determine the true historical value of your investment.
An essential tool for beginners and average investors
There are many bitcoin price dynamics that should be taken into account when investing in the bitcoin market. This can be overwhelming for both new and inexperienced investors, which is why a bitcoin investment calculator is essential. This tool allows beginners to master this price dynamic, the basis on which they can make an informed investment decision.
Risk management strategy
Bitcoin investing is associated with high returns as well as high risk. This is because bitcoin prices are known to change rapidly over very short periods of time. To mitigate these risks, investors must therefore be able to harness dynamic changes in bitcoin costs, making the bitcoin investment calculator an essential tool.
How does a Bitcoin investment calculator work?
To use a bitcoin investment calculator, the following provisions are taken into consideration:
Investment cost. This is the amount invested in bitcoin at any given time. Typically, this amount is given in dollars ($).
Start date. This is the date on which a bitcoin investment was made.
End or close date. This is the date on which the investor sells the bitcoins. It is also used to indicate when the investor estimates the holding value of his bitcoin investment.
Future price of Bitcoin. With this price, users can know how much they would earn if they bought bitcoin now and sold it at a higher rate in the future.
CPI adjustment. This is an index used to account for the effects of inflation on the bitcoin market.
Once you’ve entered the details of the above layouts, here are some of the output results that investors can generate from the calculator:
Total return on investment (ROI). This is the measure of the loss or gain generated by your bitcoin investment when it is made on the start date and sold or traded on the close date. This output is given as a percentage.
Annual return on investment. This is the same as the total ROI. The only difference is that the annual ROI provides the measure of the loss or gain of an investment each year.
Terminal value. This is the final value of your bitcoin investment on the closing date.
With these input and output elements in mind, you can now go ahead and use the calculator. Here is a step by step guide on how to use this simple bitcoin investment calculator.
Enter the value of your bitcoin investment.
Choose your trading currency. Choose either EUR, USD or GBP depending on your interests.
Select trading periods manually, including start date and close date.
Click on the ‘Calculate’ button to generate your results.
Methodology for the Bitcoin investment calculator
Unlike the stock markets, bitcoin does not close a position. Bitcoin’s closing prices are guided by the report provided by specified exchanges, such as UK’s Bittylicious. Each exchange will present different bitcoin prices for a given date. Note that the bitcoin investment calculator may have a deviation of around 10% from the prices reported by various exchanges within 24 hours of the day. This is the result of the extreme volatility of bitcoin experienced during the day. However, the bitcoin price fluctuation trends are correct for the calculator. It is therefore a reasonable predictor of the returns an investor could have generated at any given time. Additionally, investors should keep in mind that this calculator is designed for research and informational purposes, and they should exercise due diligence when making investment decisions.
Factors That Determine Bitcoin Costs
The results generated by the bitcoin investment calculator should not be used as an investment recommendation. Investing in Bitcoin is speculative in nature. This means that investing in bitcoin is very volatile, risky, and your success centers on price fluctuations. Since 2017, the price of bitcoin has risen by more than 500%, topping the market by $ 20,000, a trend never seen before. But what exactly influences bitcoin prices?
Here are some factors that affect the price of bitcoin.
Demand and supply of Bitcoin
Bitcoin is a scarce commodity and bitcoin prices are mainly influenced by two things, namely demand and supply. The sourcing part of bitcoin is known as bitcoin mining, which involves the need to solve specific equations. On the other hand, the popularity, awareness, and acceptance of bitcoin among members of the crypto market is the demand side of bitcoin. If the supply cannot meet the demands of the cryptocurrency, the rate of bitcoin increases.
While there are no specific cryptocurrency regulations, laws enacted by specific countries regarding bitcoin have had an impact on bitcoin prices. For example, when Japan legalized bitcoin as a form of payment in some stores across the country, there was a spike in Bitcoin rates.
Bitcoin is very volatile, which is why any form of attention in the news will affect its rates. Negative cryptocurrency news, for example, has negatively impacted bitcoin prices. However, some negative news is known to popularize digital currency. The reverse on both scenarios is also true.
The Bitcoin community consists of developers and users who have a significant impact on bitcoin rates. Trust among members of this community is vital when it comes to bitcoin rates.
Technological innovations in Bitcoin
Any innovation or technological evolution of bitcoin will have an impact on its prices. For example, the integration of Bitcoin with PayPal services has had an influential impact on the demand for bitcoin, leading to changes in the prices of the cryptocurrency.
Another factor influencing bitcoin rates is political uncertainty. This is because traders use bitcoin to protect against price movement in a specified currency. For example, Britain’s exit from the European Union (Brexit) caused bitcoin rates to rise. Experts predict a significant impact on bitcoin-to-pound sterling trading following the consequences of Brexit on bitcoin rates.