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How do you calculate the break even price point for a crypto trade with fees?

Personal Finance & Money Asked by Ratata on April 25, 2021

Consider the following problem:

LIMIT BUY

Total: €1,000 (starting balance)
BTC Price #1: €50,000
Fee: 1,000 * 0.5% = €5
Amount: 1,000 - 5 = €995
Purchase BTC: 995 / 50,000 = ₿0.0199

LIMIT SELL

Amount: ₿0.0199
BTC Price #2: €50,503.77516 (brute forced)
Sell BTC: 0.0199 * 50,503.77516 = €1,005.025126
Fee: 1,005.025126 * 0.5% = €5.025125628
Total: 1,005.025126 - 5.025125628 ≈ €1,000 (break even)

Question: How do you find the break even sales price without brute-forcing? (And is there something else I’ve missed?)

Note: On Coinbase Pro both maker and taker fees for volumes of less than $10k per month is 0.5%, so we can assume that it’s the same no matter which deal you get. However it would still be useful to see an answer that uses different fee structures for maker and taker trades.

One Answer

Amount: ₿0.0199
BTC Price #2: €50,503.77516 (brute forced)
Sell BTC: 0.0199 * 50,503.77516 = €1,005.025126
Fee: 1,005.025126 * 0.5% = €5.025125628
Total: 1,005.025126 - 5.025125628 ≈ €1,000 (break even)

If you take this the other way round, you are at the result:

Sell amount = 1000 + Fee = 1000 / .995 = 1005.0251256281407

so your price is

1005.0251256281407 / .0199 = 50503.775157193

Why / .995? Well, in this step you have to do the opposite of what you do in your part.

And as a - a * .005 = a * .995 =: b, a = b / .995 (where a = 1005.02512562814, b = 1000)

Correct answer by glglgl on April 25, 2021

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