Cryptocurrency investing can be a wild ride. To give yourself the best chance of success, it's important to think not just about buying but also when to sell crypto.
When investing in stocks, a good rule is to buy and hold for at least five years. Crypto is an entirely different and much more volatile market, so the traditional rules don't always apply. Keep reading to learn how to know when to sell crypto and the factors to consider in this decision.
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When to sell
When should you sell crypto?
Here are the situations when you should consider selling a cryptocurrency investment:
The value has doubled or tripled since you bought it.
If your investment has shot up in value, you should probably sell at least a portion of it. For example, you could sell what you originally invested, and then you're playing with house money going forward.
Because of how volatile crypto is, profits can disappear quickly. Take at least some of your profits as a hedge against potential losses in the future.
You no longer believe in its long-term success.
Part of investing in crypto is knowing when to cut your losses. This can be difficult since people are often very passionate about the cryptocurrencies they buy. That's why it's important not to get overly attached to any project. Here are a few signs that a cryptocurrency may be on the way down:
- There isn't much development going on.
- You have doubts about the management team.
- The community that supports it is getting smaller and smaller.
You've found better investment opportunities.
Cryptocurrencies and blockchain technology are advancing rapidly. When Litecoin (LTC 1.51%) launched in 2011, it was a dramatic improvement on Bitcoin (BTC 1.31%) in terms of transaction processing. Since then, plenty of new cryptocurrencies have left Litecoin in the dust.
If other cryptocurrencies have surpassed one of your current crypto holdings in a key area, it makes sense to sell. You can get out before it loses too much ground and free up cash to invest in something better.
When to hold
When you shouldn't sell crypto
There are no firm rules on when you shouldn't sell crypto. The most important thing to remember here is that you shouldn't panic-sell because the price has dropped. If you still think it has long-term value, hang on to it.
Panic-selling is a decision that many crypto investors later regret. They buy when a cryptocurrency is at a high, sell when the price plummets, and then miss out if the price bounces back.
If the price has dropped and you no longer think the cryptocurrency is a good investment, then you should sell. However, a price drop should never be the only reason you sell.
Things to consider
Things to consider before selling crypto
Here are the most important things to consider before selling crypto:
How much will you sell? You don't need to sell everything, especially if it has increased in value. You could sell a portion of your holdings to rebalance your portfolio and hang on to the rest if you still think the cryptocurrency will be a winner going forward.
What are the tax implications? If the cryptocurrency has increased in value, you'll owe crypto taxes. It's taxed as long-term gains if you held the crypto for more than 365 days.
Long-term capital gains have lower tax rates than short-term gains, which are taxed as ordinary income. If you're close to the year mark, consider waiting to sell your crypto until after it passes that long-term gains threshold.
Things to consider before buying crypto
Here are the most important things to consider before buying crypto:
What makes this cryptocurrency a good investment? It's easy to get swept away by the hype surrounding a popular cryptocurrency. Whenever you invest in a cryptocurrency, make sure you've researched it thoroughly and that you believe it's a sound long-term investment.
How much will you invest? Putting your entire life savings in crypto is a bad move. A smart rule of thumb is to have no more than 5% to 10% of your investment portfolio in the crypto market.
Investing in CryptocurrencyThese technologies serve as the gateway between the digital blockchain and human society.
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What Is the Next Cryptocurrency to Explode in 2024?Learn about the leading cryptos that are next to explode this year.
Should I buy?
Is now a good time to buy and hold cryptocurrency?
Yes, now is a good time to buy and hold cryptocurrency. The key is to pick quality cryptocurrencies with legitimate use cases because they have the best chance of long-term success.
Two recommendations for new investors are the two coins at the top of the market, Bitcoin and Ethereum (ETH 5.09%). Bitcoin leads the crypto market as a whole and has become popular as a digital store of value. Ethereum launched the first programmable blockchain. It's now the most popular option for decentralized finance (DeFi) platforms that provide an alternative to traditional financial services.
There are plenty of other worthwhile cryptocurrency investments available, including other coins and cryptocurrency stocks. If you spend some time researching, you can find quality investments to buy and hold.
Lyle Daly has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.
FAQs
It's taxed as long-term gains if you held the crypto for more than 365 days. Long-term capital gains have lower tax rates than short-term gains, which are taxed as ordinary income. If you're close to the year mark, consider waiting to sell your crypto until after it passes that long-term gains threshold.
What cryptocurrency does the Motley Fool recommend? ›
Like it or not, the economy and the Fed are still the biggest drivers of crypto long term. Travis Hoium has positions in Ethereum. The Motley Fool has positions in and recommends Bitcoin and Ethereum.
How much will $1 Bitcoin be worth in 2025? ›
Bitcoin Overview
| Year | Minimum Price | Average Price |
|---|
| 2024 | $84,475.55 | $87,676.23 |
| 2025 | $121,440.85 | $124,947.50 |
| 2026 | $166,264.37 | $171,262.87 |
| 2027 | $251,829.81 | $258,680.13 |
8 more rows4 days ago
Similarly to the prediction for 2040, we've used Bitcoin's 3-year CAGR of about 19% to calculate what the price of Bitcoin would be in 2050 based on those parameters. According to the calculation, Bitcoin's price could increase to $5,411,000 by 2050 and grow by more than +10,980% over the next 27 years.
When should I cash out my cryptocurrency? ›
The decision to cash out crypto or Bitcoin depends on your financial goals and market conditions. You may want to lock in gains, cut or harvest losses for taxes, or simply use your digital assets in the real world. It's crucial to consider tax implications and market timing.
What time is best to sell cryptocurrency? ›
Conversely, the best time of day to sell cryptocurrency may be in the evening or at night, when the prices tend to drop or stabilize.
Which coin will reach $1 in 2024? ›
Exploring the potential cryptocurrencies like Pikamoon, Dogecoin, Book of Meme, Rosewifhat, and Zilliqa as contenders to hit the $1 milestone. Key factors like utility, viral potential, and clear roadmaps suggest their potential amidst market sentiment and unique tokenomics.
How much will 1 Ethereum be worth in 2030? ›
By the end of 2030, the predicted Ethereum price could soar to a peak of $26,575.21. The current price of 1 Ethereum is $ 3,054.12341169.
What is the best crypto to invest $1000 in? ›
CRYPTO: BTC
If you're looking to gain exposure to cryptocurrencies in your portfolio, it's best to keep things simple and focus on the most valuable digital asset out there. It shouldn't be a surprise that I'm talking about Bitcoin (BTC 3.80%). Here's why it's the ultimate cryptocurrency to buy with $1,000 today.
How much will 1 Bitcoin be worth in 5 years? ›
We predict that Bitcoin will hold an average price of $60,000 in 2024, thanks to the Halving event, and settle more in 2025 with an average of $65,000. In 2026, we see Bitcoin trading as high as $90,000 by the end of the year. By 2030, we predict that Bitcoin could reach a high of $160,000.
According to your price prediction input for Bitcoin, the value of BTC may increase by +5% and reach $ 85,298.28 by 2030.
How low will Bitcoin go in 2024? ›
Bitcoin, it found, is likely to hit an average peak price of $87,875 in 2024, with some experts predicting it will climb as high as $200,000. On the flip side, the average lowest price Bitcoin could hit by the end of 2024, is seen as $35,734, the report said, with some predicting it will fall as low as $20,000.
What will DOGE be worth in 2040? ›
DOGE price predictions 2040
CoinMarketCap forecasts Dogecoin's value to surge, potentially hitting an all-time high of approximately $2.107 as demand continues to rise. Coinjournal offers a more bullish outlook, projecting a price of around $4.70 for Dogecoin in 2040.
What will shiba inu be worth in 2040? ›
Shiba Inu is expected to cost between $0.0045 and $0.0058 in 2040, with an average market price of $0.0049. This range represents market expectations and takes into account several possibilities as crypto is expected to attain widespread usage.
What will Dogecoin be worth in 2050? ›
In 2050, experts think that Dogecoin's highest trading price could be about $72.85, and the average might be around $66.71. But there could be times when the price drops temporarily to around $62.90. Dogecoin might face competition from other cryptocurrencies that have special features.
How do you know when to take profits from crypto? ›
Factors that Determine When to Take Crypto Profits
- Look out for bearish chart patterns – If you want to make the most of market opportunities, be on the lookout for bearish trends. ...
- Price is stagnant – If prices remain stagnant for an extended period of time, it's a sign that you should start planning your exit strategy.
If there is a high demand, but low supply, the price goes up. If there is a low demand, but a high supply, the price goes down. It's this relationship between the two that determines the price of cryptocurrencies.
How long do you have to hold crypto before selling? ›
If you held the virtual currency for one year or less before selling or exchanging the virtual currency, then you will have a short-term capital gain or loss. If you held the virtual currency for more than one year before selling or exchanging it, then you will have a long-term capital gain or loss.
Should I sell my crypto for a loss? ›
Long-term capital gains receive favorable tax rates. If you held the asset for less than a year, it is considered short-term, and you will pay ordinary income tax rates. If you sell your crypto for a loss, the IRS allows you to offset losses against other income on your tax return.
