What is the difference between unrealized gains and realized gains in the context of cryptocurrency?

1 answers

• Feb 17, 2022 · 3 years ago
  Unrealized gains and realized gains are two terms that often come up in the context of cryptocurrency investments. Unrealized gains refer to the increase in value of your cryptocurrency holdings that you haven't sold yet. It's like having a winning lottery ticket in your hand but not cashing it in. On the other hand, realized gains are the profits you make when you sell your cryptocurrency. It's like cashing in that winning lottery ticket and getting the actual money. The main difference between unrealized gains and realized gains is that unrealized gains are still on paper, while realized gains are actual cash in your pocket. While unrealized gains can be exciting to see, it's important to remember that they are not guaranteed until you sell your cryptocurrency. So, if the market takes a downturn, those unrealized gains can quickly turn into losses. Realized gains, on the other hand, are locked in once you sell your cryptocurrency, regardless of what happens to the market afterwards. So, it's important to carefully consider when to sell your cryptocurrency and convert those unrealized gains into realized gains.
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