Crypto Portfolio Risk Calculator

Most Indian financial advisors recommend 1–5% maximum allocation to cryptocurrency for risk-tolerant investors. Crypto is highly speculative — Bitcoin has seen 80%+ drawdowns multiple times. Never invest more than you can afford to lose entirely. Crypto should be the last allocation after emergency fund, insurance, and core investments are in place.

Under Indian tax law (post 2022): 30% flat tax on all crypto gains regardless of holding period. Additionally 1% TDS on each transaction above ₹10,000 (or ₹50,000 for specified persons). Losses from one crypto cannot be offset against gains from another. No benefit of long-term capital gains rate. Crypto losses cannot offset any other income.

Risk reduction strategies: allocate 50–60% to established coins (Bitcoin 40–50%, Ethereum 20–30%), diversify across uncorrelated use cases, use dollar-cost averaging monthly to reduce timing risk, keep 20–30% in stablecoins as reserve, store long-term holdings in hardware wallets, and never invest borrowed money in crypto.

Maximum drawdown is the largest peak-to-trough percentage decline in portfolio value. Bitcoin's historical maximum drawdown is 83%. Most altcoins have had 90%+ drawdowns. Understanding your real risk tolerance against drawdown is critical — can you hold through a 70% portfolio decline without panic selling? If not, reduce allocation until you can.

India has had regulatory uncertainty around crypto since 2018. Currently, crypto is legal to trade with 30% tax. However, the government may impose further restrictions. Regulatory risk is real and non-diversifiable. This is another reason to limit crypto to a small percentage of total investable wealth.