Cryptocurrencies have experienced remarkable growth in the past few years. Many people have become millionaires by investing in cryptocurrencies. Blockchain technology has revolutionized many industries like shipping, supply chains, healthcare, and banking. This technology has eliminated the needs of middle-man and now transactions can be carried out by trusted computer networks. Cryptocurrencies are also seen as a long-term store to increase the value of money; it is also termed ‘digital gold’.
At the moment the volume of the crypto market is $1.04 trillion. The cryptocurrency market is volatile and it is affected due to inflation and other reasons. Bitcoin was all-time high in November 2021 but after that, it plunged, along with the other cryptocurrencies. As of today, it is still 50% down from its value in 2021. If you are planning to invest in crypto then you should know how to cash them out. During times of downturn or other situations, you can then avoid or reduce losses by cashing your cryptocurrencies quickly.
When To Cash Out Cryptocurrencies
Whether you decide to sell your cryptocurrencies or keep them depends on several situations. But your ultimate goal will be to make a profit and minimize loss. Here are some situations when you should consider cashing out your cryptocurrencies.
The Value Has Considerably Increased
If the value of your cryptocurrencies that you had invested has doubled or tripled then it’s wise to cash them out. The increasing trend may not last forever, so sell them before a downturn happens. You may decide to sell a portion of your money as well, in case you want to continue investing in cryptocurrencies.
Not Seeing Any Long-Term Success
If you don’t notice much increase in the value of your cryptocurrencies for a long time or if you realize that not many people are trusting this investment then you can cash them out.
Find Better Investment Opportunities
There may be better investment opportunities than cryptocurrencies at any particular time. So, you should sell the cryptocurrencies and invest your money in other more profitable ventures to increase your wealth.
In late 2021, the cryptocurrency market experienced a serious downturn. If such a situation occurs, you should sell out your cryptocurrencies quickly to avoid further loss. Sometimes, it may take a lot of time to recover from this situation, and holding your cryptocurrencies may mean losing more money. So, it’s better to cash them out.
Getting A Negative News
Sometimes gossip can turn into reality. So, if you hear anything negative about the crypto market then you should consider selling your cryptocurrency. Make sure you hear about it from some authentic sources before making the cashing-out decision.
Things To Consider When Selling Cryptocurrencies
Before selling your cryptocurrencies you should consider several things. First of all, you need to decide how much you are going to sell. You can either sell the entire amount or sell part of it so that you can reorganize your portfolio. Secondly, you should consider tax implications. If your cryptocurrency value has increased then you need to pay crypto tax. But if you hold the cryptocurrency for more than a year then this tax will be in the long-term gains category. When you reach the long-term gains threshold, you will need to pay tax at a lower than if you fell in the short-term gains. So, if you are not in a hurry to sell your cryptocurrency, it’s better to wait till the long-term gains threshold to get the tax advantage. If you are selling your digital currency at a loss then you can claim a write-off. Lastly, you should consider the trading fees. Sell at a time when the trading fee is low. You should know that there may be restrictions on withdrawal amounts. Also, not all traditional banks will accept cryptocurrencies.
Ways To Cash Out Your Crypto Or Bitcoin
It is now quite easy to cash out your crypto or Bitcoin than it was a few years ago. As more people are now trading cryptocurrencies, more cash-out options are available. Here is a brief discussion of the different ways you can cash out your crypto or Bitcoin.
1. Use A Cryptocurrency Exchange
You can use a centralized exchange like Coinbase, Binance, and Kraken to sell your crypto or Bitcoin. With its ‘buy/sell’ button just choose the cryptocurrencies you want to sell and the amount you want to cash out. From this platform, you can access your cash balance and then transfer the money to your bank account if you want. However, the fee may be high for this method. For example, Coinbase charges a transaction fee of about 1.5% when you sell a higher amount of crypto using their ‘buy/sell’ button. The fee is higher when the amount of crypto you sell is low. Coinbase has an ‘advanced trade’ option which charges a 0.60% fee to sell crypto. The user interface of this option is complicated; so many users use the /buy/sell button instead. The platforms Binance or Kraken charge less fees. This is a highly secure method of cashing out cryptocurrency as encryption is used and the transaction is anonymous.
2. Use A Broker
If a broker is managing your cryptocurrency then you can cash it out from there. Brokers like Webull and Robinhood are popular and if you trade with them then you can use their platform to cash out your cryptocurrency. If you use these apps then you can’t transfer crypto to the brokerage; you need to hold your crypto or Bitcoin here to sell for cash.
3. Crypto Wallet
Crypto wallets often partner with crypto exchanges to give trading services to customers. They can sell Bitcoin. Trezor, for example, lets you sell Bitcoin for cash through Trezor Suit. Due to the engagement of third-party providers, the fees for crypto wallet is high.
4. Money Transfer Apps
Money transfer apps such as PayPal or CashApp have built-in crypto exchanges. To cash out crypto using this method you need to hold crypto in this app. These apps don’t support all cryptocurrencies. For example, PayPal supports Bitcoin, Ethereum, Litecoin, and Bitcoin Cash; CashApp supports only Bitcoin.
5. Spend Your Crypto At A Crypto-Friendly Business
Many retail shops now accept cryptocurrencies, so you can make purchases directly from your digital wallet. For example, you can buy Tesla accessories using your Dogecoin. These shops will have a sign outside saying ‘Buy with Bitcoin’. To purchase something using Bitcoin, you need to send the Bitcoin to the retailer’s digital wallet using a QR code. Alternatively, you can type the Bitcoin address into the digital wallet and send a request for the Bitcoin amount.
6. Choose Peer-To-Peer Trading
You can sell your cryptocurrency directly to another person online and get dollars in return. An exchange like Binance P2P facilitates this type of exchange. Paxful is another platform for peer-to-peer trading where you can set your rate. You will have different cash-out options as well like cash, other digital currencies, or gift cards. You can sell your cryptocurrencies to more than 12 million users. P2P exchanges have low fees and you can negotiate the fee with the buyer. You don’t need any ID verification here. You need to send Bitcoin from your digital wallet to someone else’s digital wallet. You can get payment through PayPal, Zelle, or other third-party payment companies. LocalBitcoins, Bisq, and LocalCoinSwap are some popular decentralized p2p exchanges. Centralized exchanges like Binance, ByBit, and KuCoin also offer P2P exchanges.
7. Go To A Bitcoin ATM
You can get immediate access to your cash by using a Bitcoin ATM. This ATM is different from the normal ATMs. It gives a QR code where you send your Bitcoin. Then just wait a few minutes to receive the cash. One drawback of this method is that the commission is high. So, if you are cashing out only a small amount then using Bitcoin ATM may not be appropriate. Bitcoin ATMs are now available in many locations around the world. They are normally located in a grocery store or gas station. A tool like Coin ATM Radar can help you find a Bitcoin ATM near you. For accessing the Bitcoin ATM you need to give proof of your identity. Then open a digital wallet that contains the Bitcoin you want to sell. You then need to scan the Bitcoin ATM QR code and send the Bitcoin to the ATM address. Then the ATM will give you the cash. They have high fees; you need to pay network and transaction fees.
8. Crypto Debit Or Credit Card
Crypto debit cards are gaining popularity. They are connected to the centralized crypto exchange account. You can swipe the card when you purchase things. The exchange account will change the crypto to cash which can be used for purchase. Sometimes you can earn crypto rewards which will be deposited in your account automatically. BitPay card is a type of debit card that you can use like a traditional debit card. It supports multiple cryptocurrencies and can cash them out to USD. Like Crypto debit cards, you can use Crypto credit cards to cash out cryptocurrencies. You can get various incentives for using these cards like points, miles, and cash back. The popular crypto credit cards today are Brex Card, Venmo credit card, and Gemini credit card.
As the crypto market is very volatile, selling cryptocurrencies at the right time can be very difficult. You need to keep an eye on the market all the time. When cashing out your cryptocurrency, choose an option that’s convenient and also saves you money. The popular crypto exchanges are reliable, while the P2P selling gives payment flexibility. You should know that third-party broker exchanges take a minimum two days to transfer the money into your bank account. So, if you want fast cash out then you should consider other options. Bitcoin ATM is very convenient and fast, but the commission is high. By weighing the advantages and disadvantages of each type of method you can choose the one that’s best for you.