Realised versus unrealised profit and loss
- Author
- CRYPTO PORT Editorial
- Published
- Updated
- Reading time
- 4 min
In short
Unrealised profit is the gap between what you paid and what the position is worth while you still hold it. Once you sell, it becomes realised. The valuation on screen keeps moving; it is not a settled amount — a distinction that matters for both record-keeping and tax.
Key points
- Unrealised is value minus cost while you hold
- Realised is what a sale or disposal locks in
- Unrealised gains can evaporate with the price
- Tax generally applies to realised amounts
Definition
Unrealised P&L is the difference between an asset's current value and its cost while it is still held. Realised P&L is the amount locked in by a sale, swap or settlement.
If Bitcoin bought at one million yen is now worth 1.2 million, the 200,000 is an unrealised gain. While you hold, that figure rises and falls with the price and can turn into an unrealised loss. Most of the P&L shown on an exchange's portfolio screen is of this kind.
Selling converts the difference into realised P&L. Under Japanese tax rules, disposal includes not only selling for yen but also swapping into another cryptoasset or spending it on goods. 'I never cashed out to yen' is a common and costly misunderstanding.
The distinction matters for records too. An unrealised figure is meaningless without the valuation date attached, since it changes constantly. A realised figure is fixed in the transaction history. It is the latter that a tax return needs, along with a decision about how cost basis is calculated.
Watch out for
- · Spending against unrealised gains leaves you exposed when prices fall
- · Crypto-to-crypto swaps can be taxable events; always check the primary source
- · An exchange's displayed P&L treats fees its own way and will not match tax figures