How Is the Opportunity Cost of Holding Cryptocurrencies Calculated?

The opportunity cost of holding cryptocurrencies is not calculated with a precise formula but is instead an economic concept. It represents the potential returns an investor forgoes by choosing to hold cryptocurrencies instead of another investment.

To estimate it, an investor would consider the expected return of the next best alternative investment with a similar risk profile. For example, if an investor holds Bitcoin, the opportunity cost could be the potential return from investing in high-growth tech stocks or another asset class.

This is a subjective calculation that varies for each investor based on their investment horizon and risk tolerance.