Average buy price: why yours is probably wrong
Why the average price matters
It answers the two main questions of a long-term investor:
- How far up or down am I on this coin? The current price against the average.
- How much did I make on a sale? The sale price minus the average, times the amount.
If the average is wrong, both answers are wrong. And the error builds up over the years.
Three things that break the average price
- Income in coins. Staking, airdrops, Earn on an exchange, cashback and referral rewards. You have more coins but spent the same money, so the average should go down.
- Fees in coins. You moved ETH from an exchange to a cold wallet and the network took some coins. You sold nothing, yet you have fewer coins. The money spent is the same, so the average should go up.
- Transfers between accounts. If you track each exchange separately, a transfer looks like “sold here, bought there”. The coins in the new place get the price of the transfer day as their average, and the history is lost.
A worked example
Maria is building up ETH in a long-term portfolio.
| Step | What happened | Coins | Cost | Average price |
|---|---|---|---|---|
| 1 | Bought 1 ETH at 2,000 | 1 | 2,000 | 2,000 |
| 2 | Bought 1 more ETH at 3,000 | 2 | 5,000 | 2,500 |
| 3 | Staking brought 0.1 ETH | 2.1 | 5,000 | 2,381 |
| 4 | Transfer to a cold wallet, 0.01 ETH fee | 2.09 | 5,000 | 2,392 |
| 5 | Sold 1 ETH at 3,500 | 1.09 | 2,608 | 2,392 |
Profit on the sale in step 5: 3,500 − 2,392 = +1,108 USDT. The portfolio holds 1.09 ETH at an average of 2,392, exactly what is in Maria’s wallet.
Here is what tracking without steps 3 and 4 would show:
| Without income and fees | Honest tracking | |
|---|---|---|
| Average price before the sale | 2,500 | 2,392 |
| Profit on the sale | +1,000 | +1,108 |
| Left after the sale | 1 ETH | 1.09 ETH |
| Matches the wallet? | No | Yes |
The gap in one example is small. But after a few years of staking, dozens of transfers and a couple of airdrops, the journal and the wallet stop matching, and the numbers can no longer be trusted.
How it works in Crypto Journal
Each of the three situations has its own button in a portfolio. Most trackers do not have these operations: they only know “bought” and “sold”.
- “Income” — for coins that came in for free. Pick the type: staking, airdrop, interest or other. The coins come in at zero cost, and the average price is recalculated. Add the price on that date and the journal shows how much staking earned you in money.
- “Burn” 🔥 — for coins eaten by fees. You do not have to work out the fee: open “Calculate from balance” and the journal fills in how many coins the portfolio holds. You enter what is actually in the wallet, and the difference is written off. It is neither a sale nor a withdrawal: realized profit stays the same, and the average price honestly goes up.
- “Transfer” between portfolios — neither an investment nor a gain. The coins move together with their cost, so the history is kept. Each strategy portfolio has its own average: long term one, mid term another.
- Realized profit is shown for every coin. A coin’s row in a portfolio says, for example, “Sold for +1,108 USDT”, next to the average price, cost, current price and the percent against the average.
- Tiny prices do not turn into zero. For memecoins like SHIB the journal shows $0.0₅834 instead of a useless “$0.00”, and shortens the amount to 23.24 M.
Common mistakes
- Recording staking as a purchase at the market price. You pretend to spend money you did not spend and inflate “put in”.
- Recording a fee as a sale. A sale at zero price shows a fake loss and ruins realized profit.
- Using one average for all strategies. Long-term buys and short trades get mixed, and you cannot tell which strategy works.
FAQ
How do I calculate the average buy price of a crypto coin?
Add up all the money you spent on the coin and divide it by the amount you hold now. When you sell, the cost shrinks proportionally and the average of what is left does not change.
Does staking lower my average price?
Yes. You have more coins for the same money, so each coin cost you less on average.
What if the journal shows more coins than my wallet?
Most likely the network took transfer fees. Open the “Burn” operation, enter your real balance, and the journal writes off the difference.
Is staking taxable income?
In many countries, yes, sometimes at the price on the day you received it. This guide isn’t tax advice; check your country’s rules with a professional.
Check your average price in Crypto Journal ↗
From our team · CHAOSLESSMore step-by-step breakdowns of money decisions in the AOS Guides from CHAOSLESS magazine.
chaosless.club ↗This article is for information only and is not financial, investment or tax advice. Numbers in the examples are illustrative and rounded.