It is crucial to learn more about the market of cryptocurrencies before you start trading. The main feature is a frequent fluctuation of prices, which means that there is a great chance to make a profit, but only if you manage to buy and sell these assets at the right moment. Also, you will need to learn more about the factors that are influencing the high volatility.
There are different strategies that you can use in trading. The great thing is that you can be flexible since there are over 3,000 different coins available on this market. However, they don’t share the same features and potential. There are different things that you will need to check before you decide to convert one cryptocurrency for some other or into cash.
1. Additional Fees
When you decide to convert some cryptocurrency, keep in mind that online exchanges have different fees included, at least in most cases. Choosing the right online crypto exchange is important even before trading, and you should always look for an option with the best terms. The best solution is to use some popular service, such as Binance, Kraken, or Coinbase.
Coinbase is known as a platform with low fees, and the additional option to open a pro account, where you will pay only 0.5% for transactions. This online exchange is also known for reliability, security, and excellent customer support. In case that you have some issues with withdrawing the funds on this platform, visit http://www.800-number.info/blog/my-coinbase-vault-withdrawal-is-not-working-what-to-do/
The number of fees that you have to pay can affect your profit. In most cases, the expenses will be lower when you are making bigger transactions. That means that you should avoid making small conversions more often.
2. Situation on the Market
Determining the movement of prices can be quite difficult. However, some factors can help you to make a better decision when investing and trading with cryptocurrencies. The worst option a trader can make is to sell a cryptocurrency that started gaining value shortly after. For example, those who sold Bitcoin before the year 2016 or 2017 made a profit if they bought it a few years before. However, they missed a chance to cash it out for around $20,000, which was the price of BTC in 2017.
The situation is similar when we compare 2020 and 2021. You could buy it for around $10,000 or even lower depending on the month in 2020 and then sell it for the peak price in April 2021. Currently, the volatility is very high, and there are big changes every day. Be sure to follow the trends so you can sell for the best price, or at least secure any profit.
Predictions are also helpful, but be aware that there are many analyses shared by people who want to influence the market and increase or lower the popularity of some cryptocurrencies. In that matter, you should never strictly rely on predictions. Still, those analyses that are shared by experts in this field can be helpful.
3. You Might Need to Pay Taxes
You have to know that many countries introduced regulations where income made on cryptocurrencies is subject to taxes. You should check the tax rate in your country and when you need to pay it. In most cases, cryptocurrencies are treated as property.
Therefore, the buying price plays a big role when you are planning to sell it. For instance, in the United States, you will have to pay taxes after converting them into cash, and the rate is up to 25%, depending on the income.
It is very important to save reports on your activities that will show the prices of cryptocurrencies at the moment when you invested. On the other side, if the price of the crypto you sold had a lower price than when you bought it, you can use that as part of tax deductions.
4. Timing is Everything
There is no reason to make quick decisions. As we already mentioned, the prices are changing all the time, and there are clear tendencies that some cryptocurrencies will continue to gain in value over time. The best way to understand that is by looking at the previous period. It is complex to make the right moves by only relying on predictions and trends.
However, keeping track of all news related to this market can bring you some advantages. The best option is to be more flexible. If you want to cash out, maybe the best solution is to avoid withdrawing the whole amount. For example, if you own BTC, you can convert it to some other digital assets with high potential and keep them on your e-wallet until they reach a higher price.
How to Sell Cryptocurrencies?
There are different methods you can choose, such as online exchange, ATM, peer-to-peer, and with a card. Crypto exchanges are the most popular choice today because they offer convenience and flexibility. However, it is crucial to choose a reliable and safe provider of this service.
Moreover, the popularity of crypto ATMs is increasing rapidly, with over 24,000 machines all over the world. If you are interested in peer-to-peer trade, keep in mind that the other side must be trustworthy. Also, there is a model of credit card that you can use to cash out
Converting digital assets is a simple process, and you can use various methods for that. The most important is to know how to determine the right moment and to calculate additional expenses like fees on online platforms and taxes. The biggest issue could be to sell at a price where you don’t have any profit, or you even have losses.
It can be frustrating for traders when they miss a chance to make a profit by selling some assets too early. Therefore, always check the factors and trends to be sure that the moment for selling is right. In some cases, holding the assets on an e-wallet represents a great solution since there are many assets with huge potential to reach a much higher value over time.