Every investor must find the right time to buy but also to sell. It is essential to know when to sell in any type of market. And even more so in the crypto market due to its considerable volatility! In this article we will see what is the best time to sell cryptocurrencies. Then let's get started.
Best time to sell cryptocurrencies: market cycles
Market cycles in the cryptocurrency market refer to periods of rises and falls in cryptocurrency prices, which are influenced by various factors such as market sentiment, investor behavior, regulatory news, and developments. technological. Understanding these cycles is crucial for traders and investors because they dictate the overall health and direction of market trends over time. Here's a closer look at these cycles and their role in determining the best times to buy and sell:
- Margin Phase: After accumulation, the market enters the margin phase where prices start rising steadily. This increase is usually supported by increased public interest and positive media coverage. More investors enter the market, which drives prices up even more. Traders typically look to buy early in this phase and may sell as the phase matures to capitalize on gains.
- Distribution Phase: After a significant profit margin, the market may enter a distribution phase, where sellers begin to dominate. This phase is characterized by increased volatility and the beginning of a price decline. The first part of this phase could still offer selling opportunities at higher prices before a full reversal occurs.
- Sales phase: This is where the market sees a significant drop in prices. It is marked by negative sentiment, bad news, and often panic selling. The sales phase is usually the best time to sell, ideally at the beginning to avoid further losses, but it is also a period when experienced investors might start looking for the next accumulation phase to start buying again at lower prices. .
Understanding these market cycles is essential for timing buying and selling decisions in the cryptocurrency market. By recognizing the phase the market is currently in, traders and investors can make more informed decisions.
The best times to sell are during the late markup phase, when prices peak, and just before entering the distribution phase, where prices can begin to drop sharply.
The best time to sell cryptocurrencies – useful tips
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If there has been a lack of progress in development
Sometimes a cryptocurrency project starts with high hopes and rising token value, only to see the price steadily decline due to insufficient development progress. crypto teams emphasize transparency and regular updates because if they don't deliver on promised products, investors will notice and may consider selling.
If you have won a substantial amount
On the other hand, if your cryptocurrency investment has doubled, it might be time to turn a profit. You can cash out and reallocate your capital or continue holding if you believe in the fundamentals of the project.
You want to reallocate your funds
Whether facing gains or losses, selling to reallocate funds can be a smart strategy. This allows you to recover from losses or invest in another promising project. However, be sure to carefully consider your decision, especially if you believe in the potential of your current investment.
An avalanche of negative news
The cryptocurrency market is very sensitive to news. Negative media coverage can lead to significant price drops. For example, during the TerraUSD crisis, some investors sold their LUNA early after negative reports. Staying informed can help you make timely decisions in this volatile market.
Anticipate a fall
The cryptocurrency market is cyclical. After periods of increase, corrections of more or less considerable magnitude follow. It is a particularly volatile and stressful market.
Additionally, it is often beneficial to anticipate these fluctuations by selling your cryptocurrencies. A way to gain peace of mind and benefit from the behavior of the market.
Withdraw your profits
No asset rises to the sky. Furthermore, it is essential to “pay yourself” as they say in the financial markets. When one of your cryptocurrencies is performing well, you should not hesitate to withdraw your profits. Selling your cryptocurrencies should allow you to make profits on a regular basis and thus avoid suffering in this sometimes exhausting market.
Stablecoins, an alternative to the sale of cryptocurrencies
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Trading cryptocurrencies for stablecoins has become a popular way for cryptocurrency traders and investors to protect their capital against cryptocurrency price volatility.
Stablecoins are cryptocurrencies that are typically pegged to a fiat currency, such as the US dollar, or a physical asset, such as gold. This allows them to maintain a stable value, usually close to 1:1 with the underlying currency or asset.
By exchanging cryptocurrencies for stablecoins, investors can profit when cryptocurrency prices rise, while protecting their capital against volatility. This also allows them to maintain their purchasing power if cryptocurrency prices fall.
Stablecoins are also useful for transactions outside of cryptocurrencies, as they can be used to purchase goods and services online or even withdrawn as cash in some cases.
There are many types of stablecoins available on cryptocurrency exchanges, each with their own features and benefits. The most used stablecoins are Tether (USDT), USDC, DAI, etc. It is important to choose a stablecoin that meets your needs and understand the risks of using it before using it.
By using stablecoins instead of selling their assets, investors can improve their cryptocurrency trading strategy and protect their capital against price volatility. This also allows for greater flexibility for transactions outside of cryptocurrencies, providing a risk management solution for traders and investors.
Taxes related to the sale of cryptocurrencies
The sale of cryptocurrencies is considered a commercial activity and is therefore subject to income taxes. Profits obtained from the sale of cryptocurrencies are considered income from movable capital and are therefore subject to income tax at the rate of 30% (or the reduced rate of 17% for capital gains made by non-professional natural persons ).
It is also important to note that if you have made significant profits selling cryptocurrencies, you may be subject to the Real Estate Asset Tax (IFI). Therefore, it is important to consult an accountant or tax advisor for advice on the tax obligations associated with the sale of cryptocurrency.
Best time to sell cryptocurrency: conclusion
Selling your cryptocurrencies is child's play. There are many easy-to-access solutions that allow you to quickly withdraw your winnings. In fact, you shouldn't hesitate to withdraw your winnings periodically to reward yourself.
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