What is a Bitcoin Investment Calculator?

The bitcoin investment calculator future is designed to enable investors to calculate the measure of loss or gain that investment can generate. This article highlights what you should know about the bitcoin investment calculator.

The increasing popularity in cryptocurrency has seen more traders inject new money into the digital currency market. For the last 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 in the market and cannot keep track of your investment. While some individuals are intimidated by the technicality of bitcoin investment, most investors are making great returns on their investment. Investors and traders need to understand how to value their bitcoin investment before initiating any trade, which is why having a bitcoin investment calculator is fundamental. This article highlights everything that you should know about the bitcoin investment calculator.

A bitcoin investment calculator is a tool used to establish the value of an investment for a specified duration of time. The tool can be used to determine how much an investment is worth now by checking the rate of bitcoin on a particular date based on the amount keyed on the calculator. Instead of spending time figuring out the returns, you could have generated by investing in bitcoin at 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 enable traders and investors to establish the measure of profits they will generate from a bitcoin mining activity. This calculator takes into account factors, such as pool fees, cost of bitcoins, electricity cost, and block rewards. These factors are used to determine the profits that one generates on a yearly, monthly, weekly, or daily basis.

As opposed to the bitcoin mining calculator, inventors have created this simple bitcoin calculator strong to enable investors to determine what they could have missed by investing in the past. They can also use the calculator to establish how much an investment will generate over a given time.

The Importance of the Bitcoin Investment Calculator

The bitcoin investment calculator is useful in various ways, including the following;

• Establishing the Historical Value of a Bitcoin Investment
  
  Most investors want to know how much their investment could have been worth if they had invested at some earlier date. While there are chances that you could have made significant returns on your investment, it is also true that you could have experienced a decline in the value of your bitcoin investment. The calculator will help you determine the actual historical value of your investment.

• An Essential Tool for Beginners and Average Investors
  
  There are quite a lot of dynamics of the price in bitcoin that should be considered when investing in the bitcoin market. This might be overwhelming for beginners and inexperienced investors, which is why a bitcoin investment calculator is essential. This tool enables beginners to master these price dynamics, the foundation on which they can make an informed investment decision.

• Risk Management Strategy
  
  Bitcoin investment is associated with high returns as well as high risks. This is because bitcoin prices are known to change rapidly over very small timeframes. To mitigate these risks, therefore, investors should be able to master the dynamic changes in the 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:

1. Investment Amount. This refers to the amount invested in bitcoins at a given time. Typically, this amount is given in dollars ($).

2. Starting Date. This refers to the date when a bitcoin investment was made.

3. Ending or Closing Date. This is the date when the investor sells the bitcoins. It is also used to indicate the time when the investor estimates the holding value of their bitcoin investment.

4. Future Bitcoin Price. With this price, users can find out how much they would earn if they bought bitcoin now and sold them at a higher rate in the future.

5. CPI Adjustment. This is an index used to account for the effects of inflation in the bitcoin market.

Once you have keyed in details on the above provisions, the following are some of the output results that investors can generate from the calculator:

1. Total Return on Investment (ROI). This is the measure of loss or gain generated by your bitcoin investment when made on the Starting Date and sold or traded on the Closing Date. This output is given in percentage.

2. Annual Return on Investment. This is the same as the Total ROI. The only difference is that the Annual ROI provides the measure of loss or gain of an investment yearly.

3. Terminal Value. This refers to the ending value of your bitcoin investment as of 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 go about the use of this simple bitcoin investment calculator.

• Enter the value of your bitcoin investment.

• Choose your currency of trading. Pick either EUR, USD, or GBP based on your interest.

• Select the trading timeframes manually, including the Starting Date and the Closing Date.

• Click on the ‘Calculate’ button to generate your results.

Methodology for Bitcoin Investment Calculator

Unlike stock markets, bitcoin does not close a position. The closing prices of bitcoin are guided by the report given by specified exchanges, such as Bittylicious of the UK. Each exchange will feature different prices of bitcoin for a given date. Note that the bitcoin investment calculator may have a variance of around 10% from prices reported by various exchanges within 24 hours of a day. This is a result of the extreme volatility of bitcoin experienced intraday. However, the trends in price fluctuation of bitcoin are correct for the calculator. It is, therefore, a reasonable predictor of the returns an investor could have generated around a given time. Also, investors must keep in mind that this calculator is built for research and informational purposes, and they should carry out due diligence when making investment decisions.

Factors that Determine Bitcoin Costs

The results generated by the bitcoin investment calculator should not be used as a recommendation for investing. Bitcoin investment is speculative in nature. This means that investing in bitcoin is highly volatile, risky and that your success is centered on price fluctuations. Since 2017, the bitcoin price has grown with over 500%, exceeding the $20,000 market, a trend that has never been witnessed before. But what exactly influences the prices of bitcoin?

Here are a few factors that affect the bitcoin price.

1. The Demand and Supply of Bitcoin
   
   Bitcoin is a scarce commodity, and the prices of bitcoin are primarily influenced by two elements, including demand and supply. The supply part of bitcoins 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 form the demand aspect of bitcoin. If the supply cannot meet the demands of the cryptocurrency, the rate of bitcoin spikes.

2. Government Regulations
   
   Although there is no specified regulation on the cryptocurrency, laws set out by specific countries concerning bitcoin have had an impact on the prices of bitcoin. For instance, when Japan legalized bitcoins as a form of payment in some of the country’s stores, there was a spike in Bitcoin rates.

3. Media Attention
   
   Bitcoin is very volatile, which is why any form of attention in the news will affect its rates. Negative news on the cryptocurrency, for example, has had a negative impact on the prices of bitcoin. However, some negative news has been known to popularise the digital currency. The vice versa on the two scenarios is also true.

4. Crypto Community
   
   The Bitcoin community consists of developers and users who have a significant impact on the rates of bitcoin. Trust among members of this community is vital with respect to bitcoin rates.

5. Technological Innovations in Bitcoin
   
   Any innovation or technological change to bitcoin will have an impact on its rates. For example, the integration of Bitcoin with PayPal services has had an influential impact on the demand for bitcoin, resulting in changes in the prices of the cryptocurrency.

6. Political Risk
   
   Political uncertainty is another factor that impacts bitcoin rates. This is because traders use bitcoin to hedge against the movement of prices in a specified currency. For example, the exit of Britain from the European Union (Brexit) resulted in a rise in bitcoin rates. Experts predict a significant impact on bitcoin to pound trading following the consequences of Brexit on bitcoin rates.