When Is The Right Time to Sell Crypto?

Ruby Layram 19th Feb 2025 No Comments

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In a market as volatile as cryptocurrency, understanding an opportune time to sell is crucial. One moment, prices are skyrocketing, and the next, they’re taking a nosedive. It’s enough to make even the most seasoned investors a little anxious!

But recognising a good opportunity to sell your crypto can make all the difference between locking in investment gains and watching your gains disappear.

Unfortunately, there’s no one-size-fits-all answer. Every investor’s situation is different, and market conditions can shift rapidly.

So, when is the right time to sell crypto? This is a very subjective question and effectively has no right answer. Different investors will see different opportunities to sell at various times to realise various outcomes. In this guide, we’ll walk through the common reasons investors cash out, the biggest mistakes to avoid, and a step-by-step process for selling your crypto safely and efficiently. By the end, you will have a strong understanding of when to sell before you get started in crypto.

Why Might Some Investors Sell Their Crypto?

There are several reasons why investors choose to sell their crypto.

To cash out returns

Perhaps one of the most satisfying reasons (and the most popular!) to sell is to bank your gains.

Imagine you’ve invested in Bitcoin, and its value has increased significantly. Selling a portion allows you to lock in profits and enjoy the fruits of your investment. After all, those returns can’t be used for much until they’re in your bank account.

To protect themselves against a bear market

The crypto market is known for its volatility. If indicators suggest an impending bear market—a period where prices are expected to decline—selling some of your assets can be a strategic move.

It’s about being proactive and safeguarding your investments from potential downturns.

Although this is a common reason for investors to sell, it’s also a prominent reason that some investors might miss out on future growth potential.

To reinvest in different projects

The crypto space is ever-evolving, with new and exciting projects emerging regularly. You might decide to sell holdings in one cryptocurrency to reallocate funds into another project that aligns more closely with your current investment goals or interests.

By doing this, you could spread your investment across multiple projects rather than keeping all of your money in one project.

The project no longer aligns with their investing goals

Over time, your investment strategy may change. Perhaps a particular cryptocurrency no longer fits your strategy, or new information has come to light that affects its future prospects.

In such cases, selling allows you to realign your portfolio with your long-term goals.

Common mistakes to avoid

When looking at why investors might choose to sell their crypto, it’s also helpful to spot common mistakes that you could try to avoid during your own investing journey.

Selling out of fear

Emotions can be an investor’s worst enemy. During market downturns, it’s natural to feel anxious, but panic selling can lead to regrettable decisions.

It’s essential to stay calm, assess the situation objectively, and avoid making hasty moves driven by fear.

Selling during a temporary dip

Markets fluctuate, and not every dip signifies a long-term decline.

Selling during a temporary downturn might result in missed opportunities if prices potentially rebound. It’s crucial to distinguish between short-term volatility and more significant market shifts.

Cashing out returns too early

While it’s wise to secure profits, selling too early might mean missing out on any future growth.

It’s a delicate balance between taking out your returns and allowing your investments the opportunity to grow further.

Developing a clear strategy can help manage this and prevent you from getting too excited and cashing out before your investment has a chance to grow.

When Should I Sell My Cryptocurrency?

Now that you understand why other investors might sell and common mistakes to avoid, let’s take a look at how to recognise an opportune time to sell holdings.

Crypto Prices Follow Cycles

Historically, crypto prices have followed cycles, with Bitcoin leading the way.

The peak of a bull market has often been marked by time rather than price. In previous cycles, the market top has typically occurred around 80 weeks after a Bitcoin halving.

If history repeats itself, this could be a useful timeframe to keep in mind when deciding when to sell; but bear in mind that past trends do not always indicate future trends.

Dollar-cost averaging when selling

Just like you can dollar-cost average when buying, you can also apply this strategy when selling.

Instead of selling everything at once, consider selling a percentage of your portfolio on a regular basis to even out your average sell price. You may choose to do this in conjunction with trends you’ve identified, such as might occur after a Bitcoin halving.

Another approach might be to sell a percentage every week that finishes at a new high.

This method allows you to take profits gradually, reducing the risk of selling too early or too late. Remember though, prices can go down as well as up, and holding out for the right price could also lead to greater than desired losses.

Watch for a Blow-Off Top

Crypto tends to move in parabolic cycles, and a blow-off top—a sharp price surge followed by an equally sharp drop—often marks the end of a major rally.

For example:

2017: Bitcoin had a blow-off top before the market collapsed.
2021-2022: DOGE and SHIB experienced blow-off tops before major declines.

Recognising these patterns can help you determine when there may be an opportunity to exit the market before prices take a drastic turn.

Indicators suggest that a bear market is on the horizon

Undeniably the most common reason to sell, and the biggest worry on new investors’ minds, is a long-term price decline.

To avoid panic selling, it is important to assess potential downturns thoroughly and use objective indicators to determine whether the dip is temporary or long-term.

Market sentiment indicators

Market sentiment indicators are valuable tools that provide insights into the collective mood of investors.

One widely used metric is the Crypto Fear and Greed Index, which gauges emotions driving market behaviour. The metric provides a score between 0 and 100, with 100 representing extreme greed (positive sentiment) and 0 representing extreme fear (negative sentiment).

Technical indicators

Technical analysis is a complex strategy. Nevertheless, it can be helpful to understand some of the technical indicators that analysts look for when determining whether a price decline is here to stay.

Lower highs and lower lows: Every time the price rallies, it fails to reach the previous high. When the price declines, it breaks below the last low, confirming a downtrend.

Declining relative strength index: An RSI below 30 often indicates that the asset is oversold, meaning selling pressure is dominant. A sustained RSI below 40 is often considered an early warning that bearish momentum is increasing.
Increase trading volume on ‘down days’: In a bear market, trading volume often spikes on down days—when the price of an asset is falling. This suggests that more investors are selling than buying, which reinforces the downward momentum.

It’s important to understand that individual indicators do not paint an entire picture. Before deciding to sell, you should conduct thorough research, using several different indicators to make your decision.

Should you always sell during a bear market?

Although selling during a bear market could protect your money from further declines, it may not always be the best decision.

If you had sold all of your Bitcoin during the 2021 bear market, you would have missed out on returns when the price recovered and reached $100K on the 5th of December 2024.

Generally speaking, if you are looking for long-term growth, it is wise to adopt a long-term mindset and consider that holding onto your assets through volatile periods may be more effective than selling out of fear and trying to re-enter the market on an up-trend. Of course being crypto, the risk always exists that price may never recover, and so this also needs to be taken into account.

The price has reached its maximum potential

Every investment has a ceiling. If you believe a cryptocurrency has peaked or achieved the growth you anticipated, selling allows you to capitalize on your investment before any potential decline.

How to recognise common indicators that the price of a crypto has reached its peak

Figuring out if a cryptocurrency has hit its peak can be tricky, but there are a few key signals to watch for.

First, if a coin has seen massive gains without strong fundamentals backing it, it might be due for a correction.

Another red flag may be a declining trading volume despite rising prices. If fewer people are buying at higher levels, demand could be fading.

Additionally, extreme media hype and social media buzz often signal that retail investors are rushing in at the top—when mainstream interest peaks, early investors may start selling.

Of course, there is no way of knowing for certain that a cryptocurrency has reached its peak. And, it is important to note that the crypto market is still very new and has a lot of room for growth.

You need to cash out your investment to pay for a life expense

You should never invest money that you can’t afford to lose. Therefore, if you need to use the money that is locked up in crypto for an important life expense, it is best practice to sell.

Before selling your crypto to fund a life expense, ask yourself whether it is worth sacrificing potential returns for what you want to fund. A wedding, a house or university fees are worth it. However, a new handbag or a holiday might not be so important to you down the line!

Important Things to Consider Before You Sell Your Crypto

Before hitting that “sell” button, keep these considerations in mind to ensure a smooth and cost-effective transaction.

Selling fees

Different platforms charge varying fees for selling crypto. These can include transaction fees, withdrawal fees, and others. It’s essential to be aware of these costs as they can eat into your profits.

If your crypto isn’t already stored in an exchange, it might be worth shopping around for the most cost-effective option.

Currency conversion fees

If you’re converting your crypto into fiat currency (like GBP), be mindful of conversion fees.

These can add up, especially for larger transactions, and impact the overall amount you receive.

The importance of using a reputable exchange

Choosing a trustworthy exchange is crucial. A reputable platform ensures security, fair pricing, and reliable transaction processing. Research and select exchanges with a solid track record to safeguard your assets.

For UK investors, Coinjar is a great option that allows you to buy and sell crypto from your phone.

How To Sell Crypto in The UK

Ready to sell your crypto? Here’s a step-by-step guide tailored for UK investors.

Step 1: Choose a reputable exchange

Start by selecting a reliable exchange that operates within the UK (and is preferably registered with the FCA). Platforms like Coinjar are popular choices.

Ensure the exchange supports the cryptocurrency you wish to sell and offers withdrawal options suitable for you.

Important note: If you wish to withdraw your funds to a UK bank account, you will need to use a centralized cryptocurrency exchange.

Step 2: Connect your crypto wallet to the exchange and deposit your crypto

Once you’ve chosen an exchange, you’ll need to transfer your crypto from your personal wallet to the exchange’s wallet. This process varies depending on the wallet and exchange but generally involves generating a deposit address on the exchange and sending your crypto to that address.

If you want to make quick trades, you can keep your funds on a platform such as CoinJar. This allows you to buy and sell crypto without needing to move it through a wallet.

Step 3: Navigate to the selling dashboard

After your crypto has been deposited (which may take some time, depending on the network), go to the exchange’s selling interface.

Here, you’ll see options to sell your crypto for various currencies.

Step 4: Select a selling method (Crypto or Fiat)

Decide whether you want to sell your crypto for another cryptocurrency or convert it into fiat currency like GBP. Enter the amount you wish to sell and review the transaction details carefully.

Step 5: Withdraw your funds to your bank account or crypto wallet

Once the sale is complete, you can withdraw the funds.

If you’ve converted to fiat, transfer the funds to your linked bank account or card. If you’ve exchanged for another crypto, you might choose to withdraw it to your personal crypto wallet.

Final Thoughts

Selling cryptocurrency is a significant decision that should align with your financial goals and careful research. By considering your reasons for selling, avoiding common pitfalls, and following a structured approach, you can make informed choices that support your investment journey.

Remember, the crypto market is dynamic, and staying informed is key to navigating it successfully.

Are you interested in learning more about investing? Why not sign up to the MoneyMagpie bi-weekly Investing Newsletter? It’s free and you can unsubscribe at any time if you find it isn’t for you.

Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence. When investing your capital is at risk.

Standard Risk Statement

The above article is not to be read as investment, legal or tax advice and it takes no account of particular personal or market circumstances; all readers should seek independent investment advice before investing in cryptocurrencies. The article is provided for general information and educational purposes only, no responsibility or liability is accepted for any errors of fact or omission expressed therein. Past performance is not a reliable indicator of future results.

UK residents are required (in accordance with local legislation) to complete an appropriateness assessment to show they understand the risks associated with what crypto/investment they are about to buy and enabling CoinJar to categorize them as an investor. New customers are also required under local regulations to wait 24-hours as a “cooling off” period (from account creation), before their account is active (i.e. to deposit, trade, withdraw etc.).

Cryptocurrency is currently not regulated in the UK. It’s vital to understand that once your money is in the crypto ecosystem, there are no rules to protect it, unlike with regular investments. You should not expect to be protected if something goes wrong. So, if you make any crypto-related investments, you’re unlikely to have recourse to the Financial Services Compensation Scheme (FSCS) or the  Financial Ombudsman Service (FOS) if something goes wrong.

Remember:

Don’t invest unless you’re prepared to lose all the money you invest. This is a high‑risk investment and you should not expect to be protected if something goes wrong. Take 2 minutes to learn more: www.coinjar.com/uk/risk-summary.

If you use a credit card to buy cryptocurrency, you would be putting borrowed money at a risk of loss. We recommend you obtain financial advice before making a decision to use your credit card to purchase cryptoassets or to invest in cryptoassets.

Note the standard risk warning from the CoinJar website.

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When Is The Right Time to Sell Crypto?