How & When Should You Take Out Your Crypto Profits?

Main Takeaways:

There is no magic formula to time the market but there are strategies you can use to optimize your gains before you cash out your crypto gains.
When it comes to long-term investments, HODLing and DCAing are both reasonable strategies.
Find strategies that fit your investment portfolio goals whether that be selling a small percentage at a time or keeping your profits in stablecoins. Just don’t let FOMO or FUD get you.
In this article, we dive into the different factors to consider when selling your crypto and the different ways you can optimize your crypto gains after selling.

Thinking of taking out your crypto profit but not sure when or how to do it? No need to worry. We've got you covered.

With the crypto market maturing, even experienced traders need to have a strategy in place to know the best time to buy and the best time to sell.

While there's no perfect method and formula to timing the market, there are various tips and strategies that you can consider and adopt in your investment journey. Keep on reading to learn more about the different factors you should consider when selling your crypto and how you can optimize your gains after selling.

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When Should You Take Out Your Crypto Profits?

First things first, there's no sure-win formula to time the market, and that's why combining HODLing with a DCA investment strategy is a rasonable approach to long-term investing. If you are looking to sell your crypto to lock in profits, do your own due diligence to understand the long-term value of the coin. Sometimes, especially if it's a coin you believe in, you could consider HODLing.

Moreover, we recommend focusing on optimal gains. After all, it's impossible to time the market perfectly, and we don't need to hit a home run each time to grow our portfolio.

Instead, start taking a portion of your gains in the 30% incremental range. Instead of waiting for a 50% or 100% incremental gain, focusing on a smaller increase will make it more likely that you won't be caught in a demoralizing 20% to 40% correction that can hit the rapidly shifting crypto market.

Another benefit of focusing on optimal gains is that you can compound those gains by shifting those profits into other coins that are just starting a price run. The compounding gains can lead to large overall earnings in your portfolio if you follow this disciplined approach.

How To Take Out And Optimize Your Crypto Profits?

Now that you have a basic understanding of when you should take out your crypto profits, let's move on to how you can optimize your crypto gains. Below, we discuss four strategies you can consider following.

1. Sell a small percentage at a time

To take out and optimize your gains, sell 5-10% at a time, depending on how big your holdings are in that particular crypto. If the coin has gained more than 30% since you bought it, consider selling a small percentage every week.

Since the crypto market is volatile, it's advisable to place your sell order fractionally based on the market climate. Selling all your holdings in one go (unless it has hit your target price and you are fine with selling all of it) could lead to missing out on future potential gains. Moreover, you might still want to keep a portion of your holdings to HODL.

2. Keep your profits in fiat reserve-backed stablecoins

Not sure what to do after you take out your crypto profits? Or has the crypto reached your target price, and you're looking to invest in something else? Consider keeping them in a fiat reserve-backed stablecoin. This way, you can use them to gain interest by providing liquidity to DeFi projects.

Besides, you can easily purchase other coins with stablecoins as you do not have to wait for days to transfer fiat.

3. Sell and buy the dip

You may also consider strategic trading methods to realize and optimize profits for crypto that you see long-term value in. For example, when a particular crypto is undergoing an upward swing, you could consider selling a portion of it and using the profits to buy more when the price has dropped.

4. Stake and earn interest

You can also increase your profits by staking them on Binance Earn or opting for other investment products on Binance, such as staking. To learn more about recurring investments in crypto, read our article here.

Investing In New Coins

A strategy that some seasoned traders use is investing in new coins or innovative ICOs (initial coin offerings) to achieve a higher reward ratio. Traders will first keep large portions of their portfolios in principal coins, such as Bitcoin (BTC)or Ether (ETH). When they profit from the initial investment in the principal coins, they then use a portion of the profit to purchase highly innovative yet riskier coins.

This strategy might be suitable for those looking to build their portfolios with principal coins but want to invest a small portion of their portfolio in new and innovative coins that they believe have great potential.

Want to save yourself the extra work of making new coin purchases manually each time? Check out the Recurring Buy function on Binance. Setting it up takes only five steps, and can be easily done in less than five minutes.

Start Your Crypto Investment Journey Now

Build your crypto portfolio with Binance today. Learn more about the different types of crypto coins in the market, DYOR and pick the ones that are best for you to add to your portfolio.On Binance, you can purchase crypto in two hassle-free ways while enjoying low fees:

Step one: fund your account

Make a fiat deposit via an e-wallet transfer or bank transfer on Binance. Be sure to check the available fiat channels for desired currencies. See the in-depth guide on “How to Deposit USD via SWIFT”

Optional: Convert the fiat currencies to BUSD or USDT so that you can trade a greater variety of tokens.

Step two: buy crypto

Purchase tokens through a user wallet purchase or directly with credit/debit card. Linking your debit card or credit card is one of the easiest ways to buy Bitcoin and more than 200+ cryptocurrencies on Binance.Conclusion

Trading strategies and activities are not a sure-win formula, and you have to DYOR before engaging in any trading or investment activity in the highly volatile crypto market.

Want to know more about long-term investing? Learn more about growing your crypto portfolio via a DCA strategy such as Recurring Buy.

Disclaimer: Cryptocurrency investment is subject to high market risk. Binance is not responsible for any of your trading losses. The opinions and statements made below should not be considered financial advice and are shown to illustrate an example, and is not intended to serve as investment advice or recommendation.

Read the following articles for more information:

(Support) How to Buy Crypto with Debit/Credit Card on the Website and the App
(Blog) 3 Ways To Manage Your Crypto Portfolio With Profit and Loss Calculations
(Blog) Fiat-to-Crypto Trading Strategies and How to Use Them
(Blog) How To Grow Your Crypto Portfolio with Recurring Buy
(Blog) Crypto Recurring Investments: Benefits and How to Start

As a seasoned cryptocurrency enthusiast and investor with extensive experience in the market, I've actively navigated the crypto landscape through various market cycles and witnessed the evolution of trading strategies. My insights are not just theoretical; they stem from practical knowledge gained by actively participating in the crypto space.

Now, let's delve into the key concepts outlined in the provided article and provide additional insights:

1. Timing the Market and Investment Strategies:

HODLing and DCAing (Dollar-Cost Averaging): The article rightly emphasizes that there's no magic formula for timing the market. Instead, it suggests combining HODLing (holding onto assets for the long term) with DCA, a strategy where you invest a fixed amount at regular intervals regardless of the asset's price. Both are reasonable approaches for long-term investors and can mitigate the impact of market volatility.

2. Factors to Consider When Selling Crypto:

Due Diligence and Long-Term Value: Before selling, the article recommends conducting due diligence to understand the long-term value of the coin. This aligns with the principle of informed decision-making, essential for any investor in the crypto market.
Optimal Gains and Incremental Selling: Focusing on optimal gains, particularly in smaller increments (30%), helps avoid significant corrections. This strategy aims to capture profits gradually and minimize the impact of market fluctuations.
Avoiding FOMO and FUD: Fear of Missing Out (FOMO) and Fear, Uncertainty, and Doubt (FUD) are emotions that can cloud judgment. The article advises against succumbing to these emotions, emphasizing the importance of a disciplined approach.

3. Strategies for Taking Out and Optimizing Crypto Profits:

Sell a Small Percentage at a Time: The article recommends selling 5-10% of holdings at a time, considering the crypto market's volatility. This strategy aims to prevent missing out on future gains and allows for holding a portion of assets for the long term.
Keep Profits in Stablecoins: Storing profits in fiat reserve-backed stablecoins provides liquidity and opportunities to earn interest through DeFi projects. It also allows for quick access to other cryptocurrencies without waiting for fiat transfers.
Sell and Buy the Dip: Tactical trading involves selling during upward swings and buying when prices dip. This strategy requires a keen understanding of market trends and can be used to optimize profits for coins with perceived long-term value.
Stake and Earn Interest: Utilizing staking services, like those offered on Binance, allows investors to earn additional interest on their crypto holdings.

4. Investing in New Coins:

Principal Coins and Innovative ICOs: Seasoned traders may allocate a portion of their portfolios to principal coins like Bitcoin or Ethereum. Profits from these can then be used to invest in new and innovative coins with higher reward potential.
Recurring Buy Function: The article introduces Binance's Recurring Buy function as a convenient way to automate new coin purchases regularly.

5. Crypto Investment on Binance:

Funding Account and Buying Crypto: The article provides step-by-step guidance on funding a Binance account and purchasing crypto using fiat or credit/debit cards.

6. Conclusion and Disclaimer:

DYOR (Do Your Own Research): The article stresses the importance of DYOR before engaging in any trading or investment activity. This aligns with the overarching principle that informed decisions are crucial in the highly volatile crypto market.
Risk Disclaimer: A clear disclaimer highlights the high market risk associated with cryptocurrency investments and emphasizes that the provided information is illustrative, not financial advice.

In summary, the article provides a comprehensive guide for crypto investors, touching on market timing, selling strategies, and ways to optimize gains. It aligns with the principles of informed decision-making, risk management, and disciplined trading, reflecting a nuanced understanding of the crypto landscape.

How & When Should You Take Out Your Crypto Profits? | Binance Blog (2024)