Everyone knows the good old money profit report, a classic financial instrument that is the ABC for an investor. But crypto report is a slightly different tool.
And we all know what is spinning in the head of a money and crypto trader: stocks, shares, money… But let's put everything on the shelves. Are there any significant changes between a crypto report and a FIAT report?
The main difference is in taxes. After all, in different countries, cryptocurrency transactions are taxed differently. In most cases, cryptocurrency is considered a crypto asset, which means that it is taxed upon alienation, that is, when you receive income from it. You should look into your local laws in order to create a crypto P&L report.
TVL is another important indicator that you should know when crypto-investing. Total value locked is how many funds are now in one asset, cryptocurrency or NFT. Right now, Ethereum has the highest TVL. Today it is around 10 billion dollars. Not bad for any business! For example, in the world of FIAT the most popular currencies are the dollar and the euro.
Another important indicator that strongly affects crypto P&L is gas. This is a specific indicator in the Ether (ETH) cryptocurrency, and it is used to calculate the cost of transactions. That is, this is what you pay for transactions with and its cost varies depending on the speed of transactions.
Similarly to FIAT, liquidity is important in the crypto market, but here it is called a little differently: net liquidity. The purpose of this metric is to monitor changes in inflow and outflow from period to period. Similar to Fiat liquidity, net liquidity indicator helps investors make decisions about profitable investments.
As you can see, crypto profit reports and money profit reports that Wall Street workers fill in regularly have their own similarities and differences. A crypto profit report can be used to pay taxes, in which case it is important to consider the crypto asset, but it is better to check laws of your country.