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- 1 Selling Bitcoin or any other profitable crypto is a big decision for any investor.
- 2 It is very important to check a few points to ensure profits in the end.
Bitcoin and other cryptos have become a valuable investment. However, the crypto market works differently. So traders have to read more about it when it comes to buying and selling. Many investors bought Bitcoin a long time ago. Yet, they don’t know when to sell it and make a profit.
That’s because the crypto market is always exposed to high volatility. So investors mostly end up wondering if the price will go up tomorrow. Nevertheless, they can’t wait forever for the price to go up even more. At the same time, they need to consider many other factors.
From the investor’s financial situation to the market situation, there are plenty of things to keep in mind. So to know the right time to sell Bitcoin or any other crypto, there are things investors must learn.
Things Investors Should Do Before Selling Bitcoin
There are things that one should do before selling their crypto.
Reckon the Volatility Factor
Selling or not, it’s very important to keep track of volatility. With that, the investors could be really alert about what’s going on in the market. Also, they need to understand how they affect the portfolio. Furthermore, there are some short-term ups and downs that traders need to know of.
Moreover, the price of Bitcoin affects the rates of other cryptos too. For those who’re studying volatility, knowing about the latest updates in the market is also recommended.
Check if the Coin Has Met Expectations
Every investor has some expectations in terms of the value of a coin reaching a certain level. So they need to check if the crypto’s price has exceeded expectations. For instance, suppose someone repurchased Bitcoin in 2010 for $2 and they expected that Bitcoin would reach $20 in the next five years.
In 2015, Bitcoin’s price shot up way higher and it exceeded these expectations. Thus, before selling the crypto, it’s important to see if the price is satisfactory.
Determine the Long-Term Success of the Coin
Sometimes, investors get rid of cryptos because they don’t have long-term prospects with them. Now this is quite subjective and varies from investor to investor. Hence, one needs to determine if they’re really in for a long term or not. In addition, the traders also get attached to some cryptocurrency for other reasons.
Sometimes, they are avid supporters of a particular project. They believe in successful possibilities somewhat irrationally. Thus, they need to do a rational analysis of the coin. On the other hand, some doubt the prospects of success due to reasons like team management.
Look for Better Investment Opportunities
Before getting rid of a valuable investment like Bitcoin, it’s better to check for alternatives. Remember, markets are full of surprises and exceptions. So the investors have to scour the markets for all the possible opportunities. This could be another cryptocurrency or a traditional means of investment.
There’s no bar to options when one is looking for profitable opportunities.
Know About Tax Implications
Many countries have started to levy taxes on profits made by crypto trading. Thus, they need to check if the sale of BTC or other cryptos will attract taxes or not. Now if the taxes are high, maybe the individuals want to delay the sale because the investors certainly want to make the most of their sales.
The investors can calculate their capital gains/losses using some formulas. Those who stand to make a profit from the deal will have to pay taxes for sure. On the other hand, if the sale turns out to be a loss, then they can claim the capital loss. Thankfully, there are free online crypto profit calculators that help people reckon the sum.
If the Investor is Considering Reallocation of Funds
The reallocation of funds could be a strong reason behind selling the cryptos. Investors do that to optimize their portfolios or to get access to liquidity. It is a prudent way to make one’s holdings more profitable. However, they must keep in mind that these methods don’t always assure profits.
Responding to a Rumor or Market Sentiment
Many times, investors get worried when a rumor is spread in the markets. For instance, there could be news about a whale about to get rid of their lot of a particular crypto. Usually, crypto investors follow the whales’ movement because they’re supposed to be experts.
Thus, as soon as the news is out, the price of that crypto goes down. At this moment, many small investors also end up selling their holdings of that crypto.
Parting Thoughts
Selling Bitcoin or equally precious coins could be a big decision. Therefore, investors must do a full-fledged analysis to be sure about it. At least, they should know the repercussions well. Everyone knows about the volatile nature of the crypto markets. Despite that, not everyone can plan accordingly to make the most of it.
Hopefully, now they can assess all the factors thoroughly.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
