Can’t decide when to sell crypto for profit or at a loss? Here are some strategies and tips to help you know when to sell your cryptocurrency.
The Importance of Knowing When to Sell Crypto
The cryptocurrency market is highly volatile and unpredictable with prices fluctuating rapidly and frequently.
Therefore, knowing when to sell your cryptocurrency can make a significant impact on your investment portfolio and financial well-being. Failing to sell at the right time could result in significant losses or missed opportunities to profit.
Things to Consider Before Selling Cryptocurrency
Before selling any crypto, you may want to consider these several factors that drive prices in cryptocurrency markets.
Crypto Market Trends
The cryptocurrency market is highly influenced by market trends and analysis. It is essential to monitor the market trends, track the performance of the cryptocurrency you own, and analyze market sentiment to determine whether it is the right time to sell. You can use various tools and resources to stay updated on the latest market trends, including cryptocurrency news websites, social media channels, and market analysis tools.
When deciding when to sell your cryptocurrency, it is essential to consider your personal financial goals. Are you looking to make a quick profit or to hold your investment for the long term? Are you looking to cash out a portion of your investment or sell all of it? Your financial goals will play a significant role in determining when you should sell your cryptocurrency.
Cryptocurrency investments come with a high level of risk, and the market can be volatile and unpredictable. Before selling your cryptocurrency, you should consider your level of risk tolerance. Are you comfortable with taking risks, or do you prefer a more conservative investment approach? Your level of risk tolerance will determine your willingness to hold your investment for a more extended period, wait for a market correction, or sell at the earliest opportunity.
Selling cryptocurrency can have tax implications, and it is essential to understand the tax laws in your jurisdiction. In some countries, profits made from selling cryptocurrency are subject to capital gains tax. Therefore, you should consult a tax professional to ensure you understand the tax implications of selling your cryptocurrency.
Signs that it may be time to sell cryptocurrency
The cryptocurrency market is highly volatile, and prices can fluctuate rapidly and significantly. If you notice a sudden spike or drop in the price of your cryptocurrency, it may be a sign that it’s time to sell. You should consider selling your cryptocurrency if you have reached your profit target or if the price of your cryptocurrency has dropped below a certain level.
Changes in the Market Landscape
The cryptocurrency market landscape is continually evolving, and new technologies, regulations, and market players can significantly impact the performance of your investment. If you notice changes in the market landscape, such as the emergence of new competitors, regulatory changes, or a shift in consumer behavior, it may be a sign that it’s time to sell your cryptocurrency.
Negative News and Events
Negative news and events, such as hacks, scams, or negative media coverage, can significantly impact the performance of your cryptocurrency investment. If you notice negative news or events related to the cryptocurrency you own, it may be a sign that it’s time to sell. Negative news or events can lead to a drop in the price of your cryptocurrency, and it may take some time for the market to recover.
Decrease in Market Liquidity
Market liquidity refers to the ability to buy and sell cryptocurrency quickly and at a fair price. If you notice a decrease in market liquidity, it may be a sign that it’s time to sell your cryptocurrency. A decrease in market liquidity can make it difficult to sell your cryptocurrency quickly and at a fair price, which could result in significant losses.
Know When Crypto Bull Markets Start and Finish
Cryptocurrencies trade based on the 4 year Bitcoin halving cycle because Bitcoin dominance is still the #1 factor that moves the altcoin market.
The crypto bull market usually starts when the Bitcoin RSI crosses 50, which is around 14 months before the next Bitcoin halving.
Whenever Bitcoin nears the next halving, that is usually the beginning of the crypto bull market. The next Bitcoin halving is in May 2024 so I predict the next crypto bull market starts in April 2023.
The crypto bull market peaks around 16 months after the Bitcoin halving event. I predict the crypto bull run will end on September 2025 so there is plenty of time to make profits until end.
Understand the 4 Phases of Crypto Market Cycles
Each crypto goes through 4 separate stages during a market cycle:
- Accumulation: Early buyers start accumulating crypto while prices are low.
- Runup: More buyers come into the market and drive prices up high.
- Distribution: Early buyers began selling their crypto to late buyers who are driven by FOMO
- Rundown: The market loses interest as volume starts decreasing and crypto prices start falling
Most crypto investors sell at the wrong times so you want to sell during the runup or distribution phase to maximize your profits. I sell altcoins when prices are trading for crazy amounts.
If Your Gains are Screenshot Worthy then Take Some Profits
Thinking about taking a screenshot of your crypto profits and sharing it on social media? That’s a good indicator that it’s time to sell and take some profits. I learned this tip from Chris Johnson over at Wealth Squad.