7 Tips When To Sell Your Cryptocurrencies. Learn About The Signs When A Top Is Forming, Sell Strategies, And How To Protect Your Profits.
Crypto made fantastic gains this year.
But sooner or later, every bull market comes to an end.
In December 2017, Bitcoin reached almost US$20k. Big smiles everywhere.
Then it started to drop.
I still remember that during that time many people (myself included) thought it was a small correction, and BTC would eventually break 20k and go higher to reach a $1 trillion market cap.
It did not.
Eventually, BTC had a small bounce to $17k and then continued to go down. It was going to be a long bear market that finally found its bottom in December 2019. By then, BTC had dipped to about $3k. An 84% decrease.
Back then, I didn’t know when to sell my cryptocurrencies. Those bags I was holding sure were heavy …
Because this can — and likely will — happen again, it is important to have a strategy and consider how you should cash out your Crypto portfolio. If you take profit too early, you miss the parabolic growth. If you sell too late, you might miss huge profits.
In this article, I will tell you 7 tips which show you:
- how to identify signs that the top of a Crypto cycle is near
- how to limit the damage done to you in case things go south
- how to sell your cryptocurrencies the right way
Disclaimer: This article is for educational purposes only and should not be treated as financial advice.
We don’t know how high the market will go, because it is not unusual for BTC price to drop 20% or 30% and then continue to go to new all-time highs. It is also possible that after reaching an all-time high, BTC price sees a bounce after a correction and then continues to drop further.
To make this very clear: I do not make price predictions. BTC could go to $150k. Or not.
But in any case, the following 7 tips will help you with finding the right way when the time for selling your cryptocurrencies comes.
1. Protect Your Initial Investment
+200%, +300%, or +500%. If you have made substantial gains then take your initial investment out. This way, even if everything goes to zero tomorrow, you will not lose anything, because you are investing with your profit.
2. Sell When You Reach Certain Goals
Made enough money in Crypto to finally pay off your debt? Sell.
Have enough to buy a decent house? Sell.
You get the idea. Don’t become too greedy. Instead, sell part of your cryptocurrencies when you reach certain milestones in your life.
3. Never Sell Your Whole Portfolio At Once
Nobody sells at the exact peak and buys again at the very bottom. That’s because nobody can time the market perfectly.
Unless the market is in free fall (-50%) you shouldn’t rush to sell everything at once. Very often, after a cryptocurrency experiences some significant growth, it has a correction, only to see another strong move upwards. In such a case, you will miss out on some nice profits. What you should do instead is to sell a part of your holdings. Doing so will minimize risk no matter how prices develop in the future.
4. Set Sell-Price Targets
For example, sell 20% when BTC is 60k.
Sell another 20% when BTC reaches 80k.
Sell another 20% at 100k, etc.
If the price starts to go downward, do the same.
For example, sell 20% at 80k.
Exit completely when the price is minus 50% from an all-time high.
5. Use The Market Cap As A Reference For Setting Price Targets
The larger the market cap of a cryptocurrency, the less likely it can go 20x, 30x. Whereas some small market cap Crypto projects could have the potential to go 10x, 20x. Looking at the market cap can help you to set realistic sell-price targets for your coins.
6. Signs To Look Out For That The Top Might Be Near
OK. So I wrote a lot about how you should sell your coins. What is still missing from this list is how you will know when it is time to sell your cryptocurrencies. There are a few things you should look out for.
- There is a parabolic price increase. For example, several days of +10% price increases, or a +50% increase in one week.
- Heavy headline coverage from the mainstream media on BTC price increases.
- Searches of BTC-related terms such as ‘how to buy BTC’ on Google reach new all-time highs.
- Everyone starts talking about buying Bitcoin. Even the people who are not interested in Crypto normally. Examples are your (former) classmates or co-workers who suddenly start asking you about Bitcoin. The top might also be near when your doctors, taxi drivers, and neighbors suddenly start to show a strong interest in cryptocurrencies. Another sure sign is when celebrities start to shill Crypto on social media. When Bitcoin reached its 2017 top, Katy Perry painted different symbols of cryptocurrencies on her nails and posted an image on Instagram.
7. Do Not Rush Into The Next Investment
After your exit, you shouldn’t invest in the next thing right away. Instead, take time to do your research. Evaluate opportunities and wait for the right moment to buy.
Bonus Tip: What To Do When You Bought At The Top
You bought at the top of the cycle and since then the price of your coin just went down.
What to do?
I wouldn’t say this is true for all cryptocurrencies. But with BTC and a few other big cap coins, the long term shows an unbroken uptrend which I believe will continue.
So if you happen to have bought BTC at the very top, then just wait for another cycle. It might take a few years, though.