When should you sell your Bitcoin?
The Bitcoin train is not stopping anytime soon it seems. The digital coin started off with little to no value, today it has the highest value in the crypto market. People are scrambling over each other to buy Bitcoin even at the sky-high price of $7,624. (This is the time price of Bitcoin at the time of writing this article). But the market is still unstable and Bitcoin’s value keeps fluctuating. One day the price skyrockets (a few months ago it almost reached $10,000), only to drop the next day. This causes a lot of worry to Bitcoin holders leading to doubts about holding on to or selling the cryptocurrency.
With the cryptocurrency market’s volatility, there’s the governmental and banking restrictions also to consider. So should you just sell your Bitcoins? And will you sell all of them or keep some of them invested? But it’s definitely not an easy choice – so here’s a strategy to figure out if you should sell your Bitcoins.
A Strategy for When to Sell your Bitcoin
- If the risk worries you or you have pressing financial needs, experts recommend selling about 20 – 50% Bitcoins.
- Just because you have some Bitcoins in your wallet doesn’t mean you’ll get rich instantly. If you don’t want to wait very long to get good returns it makes sense to sell them.
Remember, its ok to want to maximize your gains. But you shouldn’t regret later, so minimizing regrets is important too.
If you had invested $5 in Bitcoin 8 years ago, currently your Bitcoin would be worth around $12.7 million. (Bitcoin’s cost was 30 cents in May 2010). But, if you bought Bitcoins three years ago, a $5 investment in 2015 would be worth $76 today.
Of course, the early investors turned out to be very lucky. But these millions of dollars in earnings can only be spent if they sell their digital currency first. This has created a dilemma where people have millions of dollars in their virtual wallets but are unsure about cashing it in. They’re constantly plagued by questions about selling or keeping it as an investment. Could they earn more money in the future by keeping it as an investment? But should they sell, because the risk of the market crashing is high which could leave them empty-handed?
The sheer speed with which Bitcoin rises and falls have most of them paralyzed. Taking a decision – any decision – might prove to be wrong and lead to regrets. They do know what to do, it’s just that they need help with when exactly to sell. Basically, they don’t want any regrets.
Regret minimization decision-making strategy
Bitcoin holders holding a life-changing pile of paper gains hoping for a windfall need to consider the aftereffects of selling. Imagine two different scenarios here:
- You sell your coins at the first sign of a dip in price and then the very next minute it starts going up.
- You ignore the plunge in prices and don’t sell your bitcoins, but it keeps plummeting further.
Both these outcomes would be tragic and would lead to a lot of regrets. Both these scenarios mean you incur losses. But how do you counter that? So we’ll help you find a strategy that minimizes your regrets, either way.
The safest option we feel is to sell just enough or a part of your coins. It could 30-50%, depending on your wish and the rest of it is stored in your wallet as an investment. When you sell part of your cryptocurrency, you don’t lose out on profits which might come your way in the future. And neither will you incur heavy losses from not selling at all. So you remain rich in reality rather than just on a piece of paper!
So whether the price rises or falls, either way you’re safe. Now you might think how much you’ve lost by selling 30-50% when those could’ve earned a profit too. But think about it this way: life cannot always be about maximizing returns, it needs a balance. When you balance potential gains against the possibility of losses, you minimize any regrets in future.
And it’s not just us, quite a few experts think the same too, have a look at some of them below.
Josiah Hernandez, chief strategy officer of the Bitcoin ATM network Coinsource in a recent interview said,
“If someone’s looking to pay the bills, it may be logical to take out, say, a month’s worth of necessities.”
He added that someone pressed for money shouldn’t feel bad about selling 30% to 50% of their Bitcoin. He also suggests that they should still keep at least half of their Bitcoins invested. So when Bitcoin’s value surges up in the future, they won’t be filled with regret.
Linas Rajackas of Kaiser Exchange shares a similar train of thought. He says that you can sell enough of your Bitcoin to earn what you originally put in to buy them.
“If you have low risk tolerance, and your Bitcoin exposure becomes significant, you might consider selling a part to get back your initial investment and keep the remaining amount of Bitcoin without any risk.”
Aaron Lasher, cofounder of Breadwallet, the digital assets company also shares a similar view when it comes to selling Bitcoins. He says he wouldn’t advise anyone to sell off their Bitcoins. But if they don’t want to wait very long for a potential windfall, he advises them to sell 20-30% of their Bitcoins. He further added,
“My target price for Bitcoin is really really high – I’m thinking $250,000 a coin within five years. But I’m willing to wait 10, so my time horizon is huge.”
“The real magic is that it is up to the individual. It is their money and they get to do with it whatever they want.”
However, both of them stress that you shouldn’t sell unless it’s an urgent requirement or other major investments. And this holds true, especially with Bitcoins growth rate. In the past year itself it has seen a growth of 400%. While comparatively this might seem much lower than the 1,500% growth from 2016-2017, it’s still on a growth spurt. So it will definitely be well worth the wait.
But all this still doesn’t put off the naysayers. There are a lot of top investors who are not convinced that Bitcoin will stick as a payment method for long.
Jamie Dimon, CEO of JPMorgan calls Bitcoin “a fraud” which will “end when people lose a lot of money”.
Ray Dalio, founder of Bridgewater Associates calls Bitcoin “a bubble” which will burst in the end.
But hard core fans of the cryptocurrency who have been with Bitcoin from the beginning wouldn’t give up so soon. They wouldn’t like to pass up on the potential for huge earnings.
So to conclude, the cryptocurrency in your wallet is your investment. What you do with your money is definitely up to you. But the experts do suggest that you bide your time unless you really need money now. Then sell a part of it and just wait to get rich!
Quotes from Business Insider
Image via Shutterstock
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