With crypto being a notoriously uncertain investment form, it’s no surprise that some individuals have resorted to creating a Cryptocurrency Uncertainty Index (UCRY). Yet, with uncertainty, there is an opportunity to make profits with cryptocurrencies.
The key is to know how to sell crypto and when. If you know all of your options for selling cryptocurrencies and feel confident in executing your decisions, you can potentially start making some impressive gains. Research and learning are crucial elements for you to become competent in selling crypto, and this article is a great place to begin.
In this guide, we’ll run you through the ins and outs of when and how to sell crypto. Read on to start your journey into becoming a competent and shrewd crypto seller.
When to Sell Crypto
It’s pretty easy to sign up for an exchange, deposit some funds, and then buy some crypto coins. After doing this, you might have seen some of your crypto investments fluctuate in value and be thinking how unpredictable this type of investing is. It may also be confusing to know whether you should sell or hold your cryptocurrencies when there are so many individuals and organizations offering opposing advice.
Well, if you want to keep things simple, here is some straightforward advice to follow about crypto selling. If you notice that the value of the crypto you bought is now double or triple the value from the time of purchase, then you can always see this as a good time to sell it.
Even if you think the value of particular crypto is on the rise, you should still consider selling a portion of the crypto. You can see it as a way of protecting your original investment by pulling profits out, which you can then choose to reinvest down the line or keep. And with crypto being so volatile, it’s good to get into the habit of pulling out profits before they vanish!
Selling Long-Term Crypto Investments
If you’ve invested in one or more cryptos with a long-term mindset, then here’s some advice. The key here is to know when to cut your losses (which is easier said than done).
One tip you can follow from the outset of crypto investing is to not become too attached to particular crypto. We often see people becoming overly attached to cryptocurrencies because they are passionate about the project. There are many influencers now that have a talent for persuasion when it comes to cryptos, and it’s easy for people to become mesmerized by what they say and buy into a cryptocurrency as a result.
Some solid advice is to not become too attached to a specific cryptocurrency. This will make it harder for you to sell when the time is right.
Now let’s look at a few signs that you should take notice of that might mean you need to sell your crypto:
- The cryptocurrency’s development is stagnant or non-existent
- You and others are having doubts about the developers and managers
- You notice the community surrounding the crypto is shrinking
If you keep up-to-date with your crypto, then you should be able to see these signs pretty fast. It’s then up to you to decide whether the signs are strong enough for you to sell your crypto and move on.
Better Investment Opportunities
Another reason you might want to sell the existing cryptos you have in your wallet is when new and better investment opportunities present themselves to you. You have to remember that the crypto world is advancing and changing at a rapid pace, so you should always be on the lookout for new investment opportunities in this sphere.
There are many types of crypto available now that use different technology and principles in their development to previous ones. It could be the case that these new cryptos have more advantages than older ones meaning the older ones may become less attractive or even redundant at some point.
For instance, developers launched Litecoin in 2011 as an improved Bitcoin. It was an improvement due to the way it processed transactions. However, we now see various other cryptocurrencies that have outshone Litecoin.
When Not to Sell Crypto
No handbook tells you exactly when you should sell crypto, as there are always going to be various approaches. However, you can follow some simple advice to keep your head above water.
One thing you should try to avoid is falling victim to the psychology of panic selling. Just because the price of crypto is dropping doesn’t mean it will always continue to plummet.
After all, cryptocurrencies are very volatile, with their values fluctuating to various extremes over days and months. Yet when you analyze the long-term outlook of a cryptocurrency, you may see more of a consistent trend to where the crypto is headed.
A big mistake that many crypto buyers and sellers do is to buy a coin when it’s high and then sell when its value begins to drop. Later, many tend to regret that they sold the crypto as later down, the crypto might have bounced back and surpassed the original price they bought it for.
Instead of selling just because there is a price drop, do your research and make a more informed decision about what’s actually happening with the crypto. Of course, if the general consensus is that the coin is plummeting and it doesn’t look like it will recover any time soon, then sell.
What to Consider Before Selling Your Crypto
There are a couple of important things to consider before you sell any of your cryptocurrencies. These are:
- How much will you sell?
- Tax implications
So, when it comes to selling cryptocurrencies, a good approach is not to think in black-and-white terms. What we mean here is it’s not a great idea to sell off all of one crypto at one time (unless the situation is dire). Instead, get into the habit of selling off portions of your crypto so you can diversify your portfolio, which can make your portfolio more resilient.
There is now something called a crypto tax, in America, at least. Other countries may also have their versions of something that equates to a type of crypto tax.
You will pay crypto taxes if the value of your cryptocurrency increases. This is only applicable in a long-term sense though, meaning that they tax you after 365 days if you held crypto that long and made any gains. Here you can learn more about the government’s stance on digital assets.
What to Consider Before Buying Your Crypto
Before you buy any crypto, there are three things to consider that we think are important. These are:
- Crypto slippage
- The amount you will invest
- What makes a cryptocurrency a good investment?
Crypto slippage is something you need to be aware of when buying crypto. For example, if you want to buy Bitcoin on an exchange, the price at the time you placed your order of Bitcoin will often change when the order is executed.
In this instance, the lag time where the price changes is known as Bitcoin slippage. Slippage can work in your favor or not, depending on whether the currency’s value is rising or falling. Here you can get more info on the matter.
Regarding investment amounts, as a general rule, some people say you should invest no more than 10% into crypto as part of a wider portfolio. The reasoning here is that cryptocurrencies can be super risky compared to other investment options. Of course, this means the rewards can be much better for some investors too. Whatever you do, don’t invest money into cryptocurrencies that you can’t afford to lose.
What Cryptocurrencies Should You Choose?
Deciding on which cryptocurrencies to buy can be as difficult or simple as you want it to be. One thing you must always be aware of is that there are many people out there making money out of providing info that’s not accurate. This advice could put your investments in jeopardy if you follow it.
Try to find a good selection of trusted sources for info about cryptocurrencies and bookmark them. Use them as your go-to sources for information about new coins and the state of the market.
Without doing any research, you’re taking a big risk with your money when investing in cryptocurrencies. So make sure you do a minimum amount of research on any coins you are interested in before committing to purchase. Also, taking a long-term outlook for your crypto investments is a much more manageable way to invest in crypto, rather than stressing over your investments and buying and selling every day of the year!
Is Now the Right Time to Buy or Sell Cryptos?
Since the crypto world is evolving at a blistering pace, there’s no saying when it’s a good time, in general, to invest in crypto. Instead, it pays to take a more subjective approach when buying and selling crypto by focusing on specific coins, platforms, and technologies.
By immersing yourself in the crypto realm by following news and updates, you may start to see long-term patterns emerging. You can then feel more confident about your crypto purchases.
How to Sell Crypto the Right Way
The question of how to sell crypto has many answers. But to keep things simple, you should always think about selling a portion of your crypto when its value rises more than double or triple. Also, try to avoid getting too emotionally involved with cryptocurrencies so that you are less likely to panic sell.
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