Crypto in your net worth: how to value it, size it and track it

Crypto counts, at what it would sell for

If you own crypto, it belongs on your net worth statement. It is an asset you could sell for money, whatever you think of its long-term prospects. Leaving it out makes your number wrong, just as leaving out a savings account would.

The harder questions are how to value something that never stops trading, how much to hold and where to hold it. Each is covered below, with arithmetic you can check.

How to value it on a net worth statement

Net worth is a snapshot: what you own minus what you owe, at one point in time. For crypto, three rules keep that snapshot honest.

Use market value, not cost. Record what you could sell it for now, not what you paid. Keep purchase prices in a separate record for tax, but not in your net worth. A coin you bought for 5,000 that now sells for 2,000 is worth 2,000.

Use the same moment as the rest of your snapshot. Stock exchanges close each evening. Crypto markets do not, and the price at 09:00 can be several percent away from the price at 21:00. Pick a fixed time, such as the morning of the first day of each month, and take every price at that time from one source.

Convert to your home currency. Crypto prices are often quoted in US dollars. If you live in the euro area, convert at that same day's exchange rate and record the euro value. Otherwise currency moves and crypto moves blur together.

Some holdings need extra care:

• Staked or locked tokens: count them, and write down the date you can withdraw them.
• Small tokens with little trading: use what you could realistically sell for. If a sale would move the price, discount the value or leave it out.
• NFTs: use a recent comparable sale or the collection's lowest current price, not your hoped-for price.
• Unclaimed airdrops: leave them out until they are in a wallet you control.

Position size: what a 70% drop does to your total

There is no correct percentage for crypto. What you can do is check what different sizes would mean in a bad year.

Bitcoin has had several drawdowns of more than 70% from a peak, and many smaller tokens have fallen further, some to almost nothing. So test a 70% drop. Say your net worth is 200,000:

The table assumes everything else you own stays flat. The fall in your net worth equals your crypto share multiplied by the size of the drop. A 5% position that drops 70% costs you 3.5% of your net worth: painful, but a few months of saving can make it back. A 40% position that drops 70% removes more than a quarter of everything you have.

You can turn this around into a sizing rule:

If you could lose 5% of your net worth without changing your plans, and you plan for an 80% drop, the largest position is 5% / 80% = 6.25%. Plan for a 70% drop and it is about 7.1% (rounded). The rule does not say you should own crypto, only the most you could hold before a bad year changes your plans.

Recovery also takes more than the fall. After a 70% drop, the price must rise by about 233% just to get back to where it started (1 / 0.3 = 3.33, rounded).

Custody: exchange balance or self-custody

Where you hold crypto changes what kind of asset you own.

An exchange balance is a claim on a company. The exchange holds the coins, and your account says some of them are yours. You can buy and sell quickly and reset a forgotten password. But you depend on the exchange staying solvent and honest, and it can pause withdrawals. Mt. Gox in 2014 and FTX in 2022 both collapsed with customer funds missing, and customers waited years for repayment.

Self-custody means you hold the keys. The coins sit in a wallet only you control, often a hardware wallet. There is no exchange to fail, but all the risk moves to you. Lose the recovery phrase and the coins are gone. Send to a wrong address and there is no one to call.

For your net worth, count both at market value. Record each location as its own asset, so you can see how much depends on one company.

Stablecoins are not cash in a bank

A stablecoin is a token designed to hold a steady value, usually one US dollar. It can look like cash. It is not.

• No deposit guarantee. In the EU, bank deposits are covered by a deposit guarantee scheme up to 100,000 euros per person per bank, and many other countries have similar schemes. A stablecoin is not a bank deposit, so these schemes do not cover it.
• Issuer risk. A stablecoin is only as good as the company behind it and its reserves. TerraUSD, an algorithmic stablecoin, collapsed in 2022 and lost almost all of its value. Even reserve-backed stablecoins have briefly traded below their peg.
• Currency risk. Most stablecoins track the US dollar, so for a euro-based saver their value moves with the exchange rate.

Record stablecoins in your crypto category, not as cash.

Taxes and record keeping

Tax rules for crypto vary a lot by country, and they change often. In many countries, selling crypto for money, swapping one coin for another, or spending it can be a taxable event. Some countries treat gains differently after a holding period, and some tax staking rewards as income. Check your own tax authority's guidance, or ask a local adviser.

Whatever the rules, good records make tax time easier. For every purchase, sale, swap and transfer, keep:

• the date and time
• the coin and the amount
• the price in your home currency at that moment
• the fees you paid
• the exchange or wallet it moved from and to

Exchanges can close or limit access to old history, so export your full transaction history at least once a year. Your net worth tracker is not a tax record. It holds market values at each snapshot, so keep cost records separately.

A simple rebalancing rule

Without a rule, crypto drifts. After a strong run it becomes a bigger share than you planned. After a crash, the temptation is to sell at the bottom. A written rule makes the decision in advance.

One example: set a target share and a band around it. With a 5% target, act only when crypto rises above 7.5% or falls below 2.5% of your net worth, or once a year on a fixed date.

Take the same 200,000 net worth with 10,000 in crypto. If crypto triples while everything else stays flat, it is worth 30,000 and your net worth is 220,000. Crypto is now about 13.6% of the total. To return to 5%, you would bring it down to 11,000 by selling 19,000 and moving the money into your other investments. In many countries that sale is taxable, so include tax in the decision.

The band also stops you trading on noise. With other assets flat, crypto would need to rise by about 54% to reach 7.5%, or fall by about 51% to reach 2.5%. Smaller moves need no action.

Rebalancing works both ways. After a large fall, the same rule tells you to buy back up to your target, so only set a target you would buy at during a crash. To see crypto next to your other holdings, try the asset allocation tool.

Recording crypto in worthtracker

A few habits keep crypto useful in your net worth rather than distracting:

• One asset per wallet or exchange, for example "Exchange A" and "Hardware wallet". You can then see how much depends on a single company. Use the crypto category for all of them, stablecoins included.
• Update monthly, not daily. Take prices at your fixed snapshot time, convert them to your home currency and update each asset.
• Use the notes field for staking lock-up dates or anything else that limits a sale.

In worthtracker, you type in what you own and owe. It does not connect to exchanges or banks. It records a snapshot of your net worth on your first visit each month, so over time you see how much of your total comes from crypto and how much it moves. The free plan includes unlimited assets, CSV export, goals and milestones. Pro adds FIRE projections and unlimited snapshots. Start free and add your first wallet.