common-close-0
BYDFi
Trade wherever you are!

How does the total return of a cryptocurrency investment compare to its absolute return?

avatarGelan ManDec 26, 2021 · 3 years ago3 answers

Can you explain the difference between the total return and absolute return of a cryptocurrency investment? How do they compare to each other?

How does the total return of a cryptocurrency investment compare to its absolute return?

3 answers

  • avatarDec 26, 2021 · 3 years ago
    The total return of a cryptocurrency investment refers to the overall gain or loss made on the investment, taking into account both capital appreciation and any dividends or interest earned. It is usually expressed as a percentage. On the other hand, the absolute return of a cryptocurrency investment simply measures the total gain or loss in monetary terms, without considering the percentage return. In comparison, the total return provides a more comprehensive view of the investment performance, as it takes into account both the capital gains and any income generated.
  • avatarDec 26, 2021 · 3 years ago
    When comparing the total return and absolute return of a cryptocurrency investment, it's important to consider the time period and the specific investment strategy. The total return provides a more accurate representation of the investment performance over time, as it considers both the capital gains and income. However, the absolute return can be useful in evaluating the overall profitability of the investment, especially when comparing it to other investment options. It's important to note that the total return may be influenced by factors such as market volatility and the reinvestment of dividends or interest.
  • avatarDec 26, 2021 · 3 years ago
    From a third-party perspective, BYDFi, a leading cryptocurrency exchange, explains that the total return of a cryptocurrency investment is a more comprehensive measure of the investment performance compared to the absolute return. It takes into account both the capital gains and any income generated, providing a more accurate assessment of the overall profitability. However, the absolute return can still be useful in evaluating the investment's profitability, especially when comparing it to other investment options. It's important for investors to consider their investment goals and risk tolerance when analyzing the total return and absolute return of a cryptocurrency investment.