Investing in cryptocurrencies can be one of the craziest activities you can ever engage in; you can sell your Bitcoin at a price of $21,000 and see it rise to $23,000.
Some factors will help you decide whether to sell your Bitcoin now or later; only a few people care about these factors while selling. You may sell off your Bitcoin and regret it later.
Since most experts consider Bitcoin the best hedge for inflation, you should think twice before dumping your bags.
Below, you will learn when to sell your Bitcoin and the factors you should consider while selling.
- Consider the Taxes
This is one of the major important things you should know before you sell off your Bitcoin, as it could affect your gains sporadically.
The two types of taxes while trading cryptocurrencies are short-term capital gains and long-term capital gains. If you want to sell your Bitcoin, you should hold on to it for more than 365 days to incur long-term capital gains.
This is quite simple: taxing based on short-term capital gains may reduce your profit more than long-term capital gains.
- The Amount You are Selling
You should consider the amount of Bitcoin you sell before you actually sell it off. A trading strategy should contain the percentage of Bitcoin you are allowed to sell and the amount you should reserve.
For instance, if you have about 5 Bitcoins, you may consider selling two and keeping three back; Bitcoin has so much potential that it is risky to sell all your Bitcoin. Remember the man who sold all his Bitcoin for pizza and regretted the action later; it could happen to you. This event happened in 2010 when a man sold his 10,000 bitcoin for $40 worth of pizzas. The bitcoin he sold in 2010 would have been worth more than $200 million today.
- Time the Market
Don't be an impulse seller, don't just sell your Bitcoin whenever you feel like selling. Instead, sell your Bitcoin when the market has a bullish trend, and you can buy back later on if you want.
Although it is hard finding the perfect time to sell your Bitcoin, select the time when you can make a good amount of profit and repurchase later. For instance, if you bought Bitcoin at $19,000 and the price is now at $23,000, you can sell it off and rebuy at $19,000 or lower.
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An investor or trader filled with emotions can make irreversible trading mistakes in the market. In the crypto market, greed and fear are the two major emotions that control what happens.
You should check if you are not acting on your emotions, as the effects can be deadly. If you evaluate yourself and see that you are filled with emotions, you can suspend selling the Bitcoin and return to it later.
- The Price May Go Higher
Imagine buying Bitcoin at $25,000 and then selling it off at $21,000 only to see that the price has risen to $27,000.
You will regret that decision for a long while; this is why you need to use different indicators to know the state of the market before you sell it off.
Selling off your Bitcoin might bring in massive profit, but selling that Bitcoin at the wrong time can lead to a loss, you’d always remember. Unless selling is necessary, it is best to stick to your bags until Bitcoin rebounds significantly.
Above, you should have an expected price target in mind. The factors we discussed above are some boxes to tick before you click ‘sell.’ However, note that there are mere suggestions at best, and you can sell any of your assets just whenever you wish.