Profit and Loss (P&L)

Profit and Loss (P&L) in the context of cryptocurrency refers to the financial statement that summarizes the revenues, costs, and expenses incurred during a specified period, typically quarterly or annually, resulting in either a profit or a loss for a trader or investor. It reflects the performance of trading or investing activities in the crypto market.

Example:

Let's consider a scenario where an investor purchases 1 Bitcoin (BTC) at $10,000. After a month, the price of Bitcoin increases to $12,000, and the investor decides to sell it. In this case:

- Revenue: $12,000 (selling price)

- Cost: $10,000 (purchase price)

- Profit: $2,000 ($12,000 - $10,000)

Conversely, if the price of Bitcoin decreases to $9,000 at the time of sale:

- Revenue: $9,000 (selling price)

- Cost: $10,000 (purchase price)

- Loss: $1,000 ($9,000 - $10,000)

P&L Statements provide insights into a trader's or investor's financial performance, helping them evaluate the effectiveness of their trading strategies and make informed decisions.