In the past, cryptocurrency investing & trading was quite simple; buy Bitcoin, store it in a wallet& then wait for the price to increase. The market has now become much more complex. Traders interact with multiple exchanges, utilize multiple wallets, engage in DeFi protocols, transfer assets across different blockchains and execute 50-100 transactions in one week.
In today's market, it’s no longer sufficient to simply be aware of how many tokens you have or how much your crypto portfolio is worth (i.e. a high-level view); what modern traders really need is a detailed understanding of their portfolio performance and how much profit/loss is actually being generated from their crypto transactions.
This is where portfolio analytics can play an important role. Instead of just listing their assets and their corresponding crypto transactions, portfolio analytics can assist the trader in analyzing their portfolio, managing their risks, and making better decisions based on their data.
This is where platforms like Kryptos can be very useful, created specifically for this function. While portfolio tracking is already possible, Kryptos can offer better insights for High-Transaction Traders to better manage their activities in the crypto market and simplify crypto tax reporting as well.
To better understand the importance of portfolio analytics, it is important to divide this topic into three parts: what is portfolio analytics, why is it important, and how can platforms like Kryptos make it possible?
Tracking will provide the visibility of your total crypto portfolio, along with how much you own and the current value of your holdings via the market. Portfolio analytics allow the user to see how their total portfolio value is evolving over time through a combination of evaluating their trading history, total cost basis, overall profit or loss, and how their assets are allocated among the asset classes. Theportfolio analytical tool will take the data from tracking and producemeaningful insight.
Take for Example: A trader has a crypto portfolio with a current value of $80,000. A simple tracking tool will provide this total amount, as well as information regarding the assets that were included in his portfolio; however, it will be limited to providing the total sum of the portfolio and no contextual information as to how that pool ofassets was created.
However, portfolio analytics may reveal much more, such as which assets were responsible for the highest gains, how much money was made from trades, and which assets are profitable or underperforming. It may also show how much money was invested in each of these assets and how these investments have progressed over time.
While these details may be of little importance to those who are making only a few trades, for High-Transaction Traders, analytics is the key to understanding their entire crypto portfolio and overall performance.
As trading activity becomes more frequent, it also produces more data since each transaction generates its own set of records when a trader executes a trade, transfers an asset, swaps assets, or stakes their assets. These crypto transactions accumulate quickly.
Over time, this transaction history will build into an extensive dataset that will be difficult to analyze withoutthe right tools to do so.
Additionally, one of the major issues that traders experience is fragmentation of their portfolios due to the fact that their assets can be held on many different exchanges, wallets and blockchains. In fact, a trader may hold their assets on centralized exchanges,in their personal wallets and/or locked into DeFi protocols.
Checking each platform individually makes it difficult to understand the crypto portfolio as a whole. Although the balances can be viewed individually, the overall performance of the portfolio is not understood.
Another challenge is the evaluation of the performance. High-Transaction Traders want to know if their strategies are working. This means they want to know answers to questions likewhat assets are providing the best return, what trades have resulted in losses,and how the portfolio has evolved.
Manually, traders will utilize spreadsheets to help them analyze their performance. This is difficult as the number of crypto transactions increases.
The imposition of crypto tax obligations presents a new layer of difficulty for traders. Each time they purchase or sell an asset, it creates a taxable transaction. Many tradersexecute hundreds or thousands of these transactions throughout the year; therefore, manually calculating each one for crypto tax reporting or while using crypto tax services could take an incredible amount of time.
To address these issues associated with crypto tax obligations and reporting requirements, portfolio analytics allows investors to convert large amounts of transaction information into meaningful and organized insights.
Kryptos and other such platforms are created keeping in view the current situation in the world of cryptocurrency trading. Rather than focusing on the basic need for asset management, Kryptos provides the tools necessary for portfolio analytics and crypto tax reporting.
Bringing All Wallets and Exchanges into One Dashboard
The very first step in portfolio analytics is the consolidation of all the assets. Kryptos provides the optionfor traders to connect all their exchanges, as well as their blockchain accounts, directly to the platform. Once this integration is done, all the crypto transactions are reflected in the platform.
This way, the trader gets areal-time view of all the assets they are currently dealing in. Rather than having to open all the accounts and platforms they are using for trading, theycan now view their entire crypto portfolio in one place.
This is particularly useful for High-Transaction Traders who are involved in a high number of transactions and would otherwise lose valuable time managing all their assets.
Instant Profit & Loss Reporting
The automated profit and loss (P&L) calculation capability of Kryptos is an extremely beneficial aspect. Each transaction that's imported into Kryptos is analyzed in real-time against your overall portfolio performance.
Traders can see both completed trades and open-end positions to determine whether trades are generating positive or negative returns and if their trading strategy is successful orineffective. For high-volume traders using Kryptos, the P&L calculation automation drastically reduces the need to manually account for each trade andprovides dealers with almost instant transparency of their overall crypto portfolio performance.
Automatic Cost Basis Tracking
Cost basis is an essential component of portfolio analytics. When one is buying the same stock repeatedly at different prices, determining the average price for the stock can be complex.
Kryptos helps in the automatic tracking of purchase prices and determination of the cost basis for each asset in the portfolio. This helps the trader understand his real position with regard to the current market price.
Understanding the cost basis also helps traders maintain accurate records for crypto tax reporting, especially when using best crypto tax software or professional crypto tax services.
Built-In Tax Analytics
For the high-transaction trader, crypto tax reporting can be one of the most stressful activities related to crypto trading. Every transaction, swap, and asset sale can trigger crypto tax implications based on local regulations.
Kryptos has built crypto tax analytics directly into its portfolio management system. As crypto transactions are loaded into the system, it automatically calculates gain sand losses and organizes the information required for tax reporting.
This way, the trader can be aware of tax implications throughout the year rather than waiting until tax season to find out they have a problem. This functionality makes Kryptos comparable to some of the best crypto tax software available today.
Identifying Tax Loss Harvesting Opportunities
Tax outcomes can also be maximized by utilizing portfolio analytics for trade optimization. Kryptos provides the ability to analyze unrealized losses from within the portfolio and to find those positions that can be used in tax loss harvesting, thereby maximizing the potential for offsetting capital gains by strategically realizing losses in order to reduce the overall crypto tax liability of the trader.
By providing this insight to active traders who are managing multiple positions within a portfolio, it improves overall portfolio efficiency and supports better crypto tax reporting.
Tracking DeFi and NFT Activity
In addition, today’s crypto traderis more likely to engage in DeFi or NFT activities in addition to traditional exchange-based trading. These activities will require additional crypto transactions to be tracked in the analysis of the portfolio.
Kryptos supports DeFi and NFT transactions as part of its offering for analyzing a trader’s crypto activity and maintaining a complete overview of their crypto portfolio.
The crypto market is an ever-changing ecosystem filled with an abundance of data. Therefore, for traders managing large volumes of crypto transactions, simply tracking assets is no longer adequate in assessing activity within your overall crypto portfolio.
Using portfolio analytics provides deeper levels of insights into evaluating strategies, monitoring earnings, managing risk, and preparing for crypto tax reporting. By transforming transaction data into valuable analytical data, analytical tools enable traders to move from basic tracking to intelligent portfolio management.
Platforms such as Kryptos offer a complete platform that consolidates information from multiple sources, automates profit and loss calculations, tracks cost basis, and provides advanced crypto tax insights similar to those offered by the best crypto tax software and professional crypto tax services.
For High-Transaction Traders who conduct many trades regularly, these analytical capabilities are critical tools that allow them to participate confidently in an increasingly complex crypto marketplace.
