Crypto average cost: calculate your average entry price and track performance accurately

When you buy a digital asset several times, the latest price paid is no longer enough to determine whether the position is genuinely in profit or at a loss. You need to calculate its average cost per unit, often referred to in France as the PRU.

The principle is simple. It becomes more difficult when purchases multiply, fees are added, several platforms are used or part of the position is sold.

Average cost is an excellent management tool. One frequent source of confusion must nevertheless be avoided: the average cost of one bitcoin or ether is not the formula used by the French tax authorities to calculate the taxable gain on a digital-asset portfolio.

What is average cost?

Average cost represents the mean acquisition cost of one unit of an asset.

If you invest €2,000 to acquire 1 ETH, your average cost is €2,000 per ETH. If you then buy a second ETH for €3,000, your average price is neither €2,000 nor €3,000. It becomes €2,500.

The basic formula is:

The calculation must be weighted by quantity. A simple average of the different purchase prices will often produce an incorrect result.

Example with several purchases

Imagine three bitcoin purchases:

• 0.10 BTC bought for €4,000
• 0.15 BTC bought for €7,500
• 0.05 BTC bought for €3,000

The total invested is €14,500. The total quantity acquired is 0.30 BTC.

If bitcoin is subsequently worth €55,000, the position shows an unrealised gain. It is not realised until a sale takes place.

Current value of the position:

Unrealised performance:

Why a simple average gives the wrong result

Suppose you buy:

• 0.01 BTC at €40,000
• 0.20 BTC at €60,000

The average of €40,000 and €60,000 is €50,000. Yet the vast majority of the quantity was bought at €60,000.

The weighted calculation gives:

• First purchase: €400
• Second purchase: €12,000
• Total: €12,400 for 0.21 BTC

The difference is significant. Approximate tracking can create a misleading impression of performance.

Should fees be included?

Yes, if your objective is to understand the true cost of the position.

Transaction fees charged by a platform increase the acquisition cost. Network fees can also be included when they are directly linked to the transaction.

Example:

• Purchase of 1 ETH: €2,000
• Platform fee: €10
• Total cost: €2,010

The actual average cost is therefore €2,010 per ETH.

You should also check how fees are collected. Some platforms charge them in euros, while others deduct a small portion of the asset purchased. In the second case, the quantity actually received is lower than the quantity ordered.

What happens after a partial sale?

In portfolio tracking based on weighted average cost, selling part of a position will generally not change the average cost of the remaining units. The quantity decreases, while the average price of the retained purchases remains the same.

Take a position of 2 ETH with an average cost of €2,500. You sell 0.5 ETH when the price reaches €3,000.

The result realised on this sale, for performance-tracking purposes, is:

There are 1.5 ETH left with a tracking average cost of €2,500.

This method is useful for analysing a position. It should not be confused with the French tax method applied to disposals of digital assets, which considers the portfolio as a whole.

Average cost, unrealised P&L and realised P&L

These concepts answer different questions.

Average cost indicates the mean entry cost.

Unrealised P&L measures the theoretical gain or loss if the position were sold at the current price.

Realised P&L corresponds to the result of a sale that has actually been executed.

Unrealised P&L formula:

Realised P&L formula for average-cost tracking:

An interface displaying “+€2,000” without specifying whether the result is unrealised or realised can easily mislead.

Does DCA always reduce average cost?

No. Dollar-cost averaging means investing at regular intervals, regardless of market fluctuations.

If new purchases are made below the current average cost, they reduce it. If they are made above it, they increase it.

DCA therefore guarantees neither a better price nor a profit. Its main purpose is to spread entry points and reduce dependence on a single purchase date.

Managing several platforms and currencies

Tracking becomes more difficult when assets are spread across several exchanges and wallets.

To obtain a consistent average cost, you need to consolidate every purchase of the same asset. A transfer between two of your accounts is not a new purchase and should not reset the average price.

If some transactions are made in dollars and others in euros, you need to choose a reference currency and use the relevant conversion rate for the date of each transaction. Using the current rate to convert old purchases distorts the result.

DeFi transactions add further challenges: swaps, gas fees, tokens received in return for a deposit, rewards and wrapped assets. In such cases, it is useful to preserve the raw history before attempting to simplify the calculation.

Average cost and French taxation: the essential distinction

For an individual subject to the French digital-asset tax regime, the taxable capital gain is not calculated solely from the average cost of the asset sold.

The tax formula notably takes into account:

• the price of the taxable disposal
• the total acquisition cost of the portfolio
• the total value of the portfolio at the time of disposal

It therefore considers all digital assets held, including those spread across several platforms and wallets.

Average cost remains highly useful for tracking a position. It does not replace a complete tax calculation and should not be presented as doing so.

This separation between financial tracking and taxation is one of the points that requires the most explanation in training. The two calculations use similar data, but they do not serve the same purpose.

How to track average cost without losing the thread

A simple approach is to record the following for every transaction:

• date
• asset
• quantity bought or sold
• amount paid or received
• fees
• currency used
• platform or wallet concerned

A spreadsheet may be sufficient for a small number of transactions. Once platforms and assets multiply, a tracking tool becomes more convenient.

The Portfolio Tracker available on AflimBroohm.com calculates the weighted average cost for each asset and stores data locally on the device. It is designed to monitor portfolio performance. It is not tax-return software and does not replace verification of data exported by platforms.

The most common mistakes

Using the latest purchase price

The latest order does not represent the average cost of the whole position.

Using an unweighted average

Each price must be weighted by the quantity purchased.

Forgetting fees

A small difference repeated over many transactions can significantly alter the actual cost.

Counting a transfer as a purchase

Moving assets between two personal accounts does not create a new position.

Confusing unrealised performance with cash profit

A gain displayed on screen remains theoretical until a sale is completed.

Using average cost as the tax calculation

The French tax regime for individuals is based on a portfolio-wide formula.

In summary

Average cost answers a simple question: at what average price did I acquire this asset?

It helps track a series of purchases, assess a position and measure a realised result when a sale takes place. To remain reliable, it must include quantities, fees and every platform used.

A clear boundary must then be maintained between portfolio tracking and tax calculations. This distinction avoids asking a single indicator to perform two different jobs.