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How much does an asset (BCH) need to go up, for it to recover what I lost?
If you don't have the patience or don't like math, I'll answer right away: The percentage increase must always be greater than the percentage decrease! You can skip to the last paragraph where I give a real example to our dear BCH! Which you can confirm using your calculator, abacus, spreadsheet, or (insert your favorite calculation instrument here)...
What, you didn't skip to the last paragraph? You have been warned! Sit down that comes some basic content (ok, basic is always relative!)...
The basic math is: If the asset was worth X and lost d%, its new value will be:
Xd = X (1-d) [here d is written in decimal form, in the examples it will be clearer!]
If the asset has an increase of p%, its new value will be:
Xa = X.(1+p) [here p is written in decimal form, in the examples it will be clearer!]
Putting the two ideas together, if you want the final value to be the same (as the initial value) you will have to have:
X(1-d).(1+p) = X
Soon (1 - d).(1 + p) = 1 And finally: 1 + p = 1/(1 - d) Or if you prefer: p = [1/(1- d)] - 1
Let's see this for a few cases:
a) If it drops 10% -> d = 0.1 then, in this case, p = [1/(1 - 0.1)] - 1 = 0.1111 ~> It needs to increase 11.11%
b) If it falls 20% -> d = 0.2 then, in this case, p = [1/(1 - 0.2)] - 1 = 0.25 -> It needs to increase 25%
c) If it falls 40% -> d = 0.4 then, in this case, p = [1/(1 - 0.4)] - 1 = 0.6666 ~> It needs to increase 66.67%
d) If it drops 80% -> d = 0.8 then, in this case, p = [1/(1 - 0.8)] - 1 = 4.0 ~> It needs to increase 400%
e) If it drops 100% -> The equation could not be applied! Because you would have lost everything :-)
According to this historical series by BCH (br.investing.com/crypto/bitcoin-...):
On 05/24/2021 the value of BCH opened the day at U$751.47 and on 06/24/2021 BCH opened at U$487.36 that is, in one month we had a devaluation of ~35.15%
[(1 - d) = 487.36/751.47] => d = 0.3515
So, to get back to the values of 1 month ago, we will have to have an appreciation of:
p = [1/( 1 - 0.3515) - 1] => p = 0.5420 that is, an appreciation of 54.20%
PS: I am, for simplicity, disregarding the devaluation of the dollar!
Therein lies the importance of making small and regular contributions. A fall like that doesn't affect most of your capital, and the most important is, that by continuing to make investments, your gains will be greater than the losses simply if the price goes back to the previous level, as well shown.
long term focus
It has to be said: you won't get rich overnight!
The best way to make sustainable profits is with patience and knowledge. The smart investor is unfazed by media buzz and news that show sudden gains: you need to draw your own strategy and have a solid foundation of why you're investing in a particular asset.
So it's also important to choose substantiated assets. These are the ones that, in the long run, can bring consistent returns.
Seeing the exorbitant numbers in the media, many investors and non-investors run and invest very high amounts in the crypto market at once, without even understanding how this world works and what they are investing in.
An example of this is the rise of Dogecoin. Born as a meme, in 24 hours the price of the currency has already risen by 41%. In 2021 alone, the return is already 8100%. Despite the tempting comebacks, DOGE is still born out of a joke, and is not founded like Bitcoin and Ethereum. Investing in it without experience can be very dangerous.
Also, you have to be honest with yourself. Cryptoactives fluctuate a lot: you can profit 100% in one day and you can lose the same amount in another. Therefore, a good risk management, a good psychology and a good strategy are very necessary when entering this world. It is also recommended that you take an Investor Profile test to see if this modality makes sense for you.