When To Sell Crypto: Everything You Need To Know
Crypto Knowledge

When To Sell Crypto: Everything You Need To Know

written by John Murphy | February 10, 2023

Cryptocurrency investment is a wild ride. For investors looking to make the most out of cryptocurrency trading, it is vital to understand when to sell crypto. 

Volatile cryptocurrencies keep on entering the market, which makes it tough for investors to make sustainable investment decisions. So, even veteran stock exchange investors move with caution regarding new cryptocurrencies.

However, applying the right strategy for buying and selling crypto can offer significant returns. While many investors believe the best crypto investing is holding, there are brave souls who sell when they feel the time is now.

Furthermore, judging based on market analysis when to sell crypto is not a tough art to learn. Many newbies have mastered selling crypto at the perfect time and taking home handsome profits.

This article will explain everything you need to know about when to sell crypto.

Ideal Scenarios To Sell Crypto

The following section covers scenarios and times when you might want to sell cryptocurrency like Bitcoin or Ethereum. Although these are not hard-and-fast thumb rules, you can do your homework and study the market to decide when to offload cryptos.

However, keeping the below points is certainly worth bearing in mind.

  1. Lack of Development Progress

Sometimes, we see a crypto project skyrocketing, making ambitious promises. However, after a certain time, it air whoops out of the balloon, and the price starts bleeding over weeks or months. It happens because a project does not make enough development progress.

Hence, investors need to sell those coins if a crypto project is not coming to fruition. 

  • Investment Maturity

On the other hand, if you have already made a substantial amount by holding crypto, for instance, the price has doubled, this is a good opportunity to sell your coins. However, the project may keep on dwelling on positivity, but the growth rate will not remain the same.

Furthermore, the decision solely lies on the investor’s shoulders; if you wish to relocate your investment, investment maturity is the time.

  • Reallocating Funds

Reallocating funds is a strategy that most investors adopt after experiencing gains or losses with a particular asset. Generally, reallocation occurs when an existing project is making profits; however, it also is adopted by those who already have handsome returns.

Moreover, the reallocation of funds can be partial or full, so stay vigilant to market trends and decide where you deem necessary.

  • A Spate of Negative News

Cryptocurrency is heavily dependent on word of mouth over social media. Trends in media push prices of cryptocurrencies, the fact that influencers can have a huge impact, it is unsurprising that cryptos can move or down.

Now and then, you must have seen negative vibes circulating about a crypto project, which leaves investors curious about the coin’s future. So, it becomes a red light for many users as the time to sell that particular crypto.

  • Bowing Out

The last case scenario where you might consider selling cryptos is when you decide to quit the market altogether. However, it may not seem like a charming decision, and there is nothing bad in quitting if you cannot cope with a turbulent market.

Points To Consider Before Selling Crypto

Before deciding to sell your cryptocurrency, here are the most important points.

  • How much to sell?

You would not want to sell everything, especially if crypto has increased in value. However, to diversify your portfolio, you can plan to sell a certain portion and hang on to the rest. 

  • What are the tax implications?

You may have to pay taxes if your investment has gained value during your holding period. So, if you plan to sell, try to offload one-year-old coins first, as applicable is low.

  • Alternate Options

Since new cryptocurrencies are entering the crypto metaverse, thus consider the better alternate option before selling a portion. As the market is highly volatile, thus having a considerate alternate is a must-have to make good returns with a selling option.

Frequently Asked Questions

How do I know when to sell crypto?

Although there is no thumb rule, the ideal time to lay off crypto is when it has already increased in value by two or three times the amount you paid. 

At what percentage should I sell cryptocurrency?

A smart rule for crypto investment is to have no more than 5% – 10% of the investment portfolio in the crypto market. Thus, having a diversified portfolio of coins is better than placing the entire investment in a single token.

Should I sell crypto when it is high?

Yes! It is a good time to sell crypto when it is high; however, do not sell the entire portfolio. Consider selling a portion of your coins that has gained high value.

Should I sell my crypto at a loss?

Some crypto investors adopt selling on loss to mitigate their taxes since authorities allow offset losses with gains, so you can plan to sell crypto on loss.

Should I hold crypto for the long term?

The better way to profit from a crypto project is to hold it long-term; however, if it is making losses, it better sell out. Similarly, tax rates are low on investments held for more than a year.

Parting Thoughts

Although cryptocurrency will improve the world, it is an erratic market. Therefore, even seasoned investors face bad episodes. The focus of each investor should remain on long-term profits in this DeFi platform which has the potential to provide desired financial results.

Therefore, when to sell crypto is an art that is thoroughly described in our guide. There are numerous scenarios where you may want to bow out of the full or partial investment. However, staying up-to-date with potential price fluctuation is key to staying relevant in an otherwise turbulent market. 

Furthermore, the guidelines discussed will help to navigate difficult waters. However, they do not guarantee success, so seeking professional advice and doing homework is a key crypto-selling decision.

In addition, basic investing rules apply to the crypto market, and never invest more than your muscle.

We hope you enjoyed reading and learned when to sell crypto. We wish you good luck with your investment.