A published return is a simple calculation: value at the end divided by value at the start. What a holder actually experienced is usually different, sometimes substantially. The gap is not mysterious and it is not anyone cheating. It comes from a handful of structural causes.
Timing, and the arithmetic of averages
An asset’s return assumes a single purchase at the start and a single sale at the end. Almost nobody does that. Capital is added and removed over time, which means the return that matters is weighted by how much was invested at each moment rather than by how much time passed.
Because people tend to commit more capital after prices have risen and less after they have fallen, the money-weighted result is often worse than the time-weighted one. This is a well-documented pattern in markets generally, and there is nothing about crypto that exempts it.
Costs that do not appear on the chart
The published series is a series of prices. It contains no spread, no fee, no funding cost, and no tax. Every one of those is real and every one is subtracted from what you keep.
In assets with wide spreads and thin depth the trading cost alone can consume a meaningful share of a modest return, particularly for anyone transacting frequently. The cost of liquidity is a real expense even though no line item names it.
Volatility drag
This one is pure arithmetic and it surprises people. A fall of fifty per cent requires a rise of one hundred per cent to recover. Because losses and gains are not symmetric in this way, a volatile path produces a lower compounded outcome than a smooth path with the same average — and the effect grows with volatility.
It is why an average return quoted without reference to the path is an incomplete description of what actually happened to the capital.
Survivorship
Comparisons across assets are usually drawn from the assets that still exist. Those that failed leave the sample, and their absence flatters everything that remains. Any historical comparison of “crypto returns” that begins from today’s list of assets is measuring a group selected for having survived.
What follows from this
Treat a published return as an upper bound on what a holder would have kept, not as an estimate of it. Read it alongside the path rather than as a single number. And be particularly careful with comparisons drawn from a list of things that are still here.
Our guides on risk and volatility and market cycles cover the surrounding ideas, and the calculators let you model scenarios with your own numbers. Nothing here is financial advice, and past performance does not predict future results.