Top 5 Crypto Exit Strategy: A 2024 Comprehensive Guide

TLDR

This guide will explore successful crypto exit strategies and provide tips for choosing the right one.

There are two main exit strategy types: short and long-term, that investors can use depending on their risk tolerance.

Short-term is a plan you follow while your investment is still relatively new and has not yet gained value. The goal is to sell your cryptocurrency and profit while it has potential.

A long-term plan is followed when your investment has gained significant value. The goal is to hold onto the asset until its price rises significantly and then sell it at a profit.

Although the two are great, depending on your trading strategy, you need a good exit strategy that can give you more money in the crypto world during a bull market. You’ll know how to develop a winning exit strategy by the end.

Introduction

An exit strategy is your actions when you sell your crypto investments. Having an exit or selling plan in place is essential because if you don’t, it could cause severe problems for your portfolio.

Many investors do not know this, so they don’t know what to do in unfavorable market conditions. Fortunately for you, this article will let you in on a fact not many investors know.

Crypto Exit Strategy – The Best Time to Sell 

An exit strategy is a plan you have for selling your crypto assets.

The primary purpose of an exit strategy is to ensure that you won’t lose money on your investments. If you missed out on some of the best opportunities in crypto and want to get back what you invested, it’s essential to ensure that none of your coins are worth more than what they were when you bought them.

That is why you have a clear and concise exit strategy within your support and resistance levels because it will give you peace of mind knowing that if things go south, you’ll recover some or all of your losses.

An exit strategy should include the following:

1. The process for selling on an exchange such as Binance or Uphold.
2. Where to store your coins when they’re not being actively traded.
3. How much time do you have until your coins are deemed “not liquid” by exchanges – i.e., no longer available for immediate sale?

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Binance is a great combination of low fees, deep liquidity and multiple cryptocurrencies and trading pairs. We have tested every aspect of it and it STILL holds its reign as the top exchange in the world. In our view, it is the perfect crypto exchange for both newbies and advanced traders alike.

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What are the 5 Best Exit Strategies?

Crypto investors can use the five best exit strategies as a selling plan to exit their crypto investment. Depending on your crypto portfolio and investment style, you can use any of these strategies for long-term gains.  

The five best crypto exit strategies are:

1. Exit at price targets.
2. Exit by portfolio.
3. Exit by return (%).
4. Dollar-cost average out.
5. Exit by cycle.

Let’s review them one by one.

1. Exit at price targets

This is a perfect example of how the crypto market is changing. You could lose everything if you invest in a coin that fails to meet your target amount. This is why it’s essential to have an exit strategy in place before your initial investment.

The best way to do this is through a crypto exit strategy. Here’s what you need to know:

• Decide precisely how much money you will lose and when you risk losing it (i.e., your thresholds).
• Find a cryptocurrency that has reached its target price and will continue rising or is highly volatile.
• Ensure the coin has at least one or two more years until it reaches maturity or its hard fork date (if applicable).
• Wait for the moment when the price of your coin reaches its price targets and then sell out at that point; this will help you attain significant gains, even in small chunks.

Once you’ve sold out, please don’t touch any more coins unless they rise above their target price again!

2. Exit by portfolio

A portfolio crypto exit strategy is a set of rules and tactics you will follow to sell your cryptocurrency holdings when the time comes.

You can use a portfolio crypto exit strategy to manage the risk associated with your crypto investments. You can also use a portfolio crypto exit strategy to reduce the number of coins you hold, which might be good if you’re looking to reduce the regulatory risk associated with new regulations or are worried about being hacked.

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CoinStats is a must-have cryptocurrency portfolio tracker for digital currency traders. It supports over 8,000 crypto assets and has a solid portfolio management dashboard. While the app doesn't have a robust free version like some portfolio managers, it is a practical choice for many. Users can connect to a wide range of wallets, exchanges, and other services to view their entire crypto portfolio on a single screen.

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Here are some examples of portfolio crypto exit strategies:

Sell all high-risk coins immediately

This is the most revolutionary approach, and it’s not for everyone. Many people prefer to sell only those coins, most likely to lose their value in the future. That way, they don’t have to worry about losing all their money at once — they can keep selling more and more until the price reaches their target.

Sell low-risk coins gradually over time

This approach is similar to selling high-risk coins immediately but with one important difference: It allows you to avoid taking large losses upfront. Instead, investors sell small, low-risk coins until they reach their target price without making big decisions. 

3. Exit by return (%) 

Another way cryptocurrency investors can exit from the investment is by using their return percentage. This strategy is almost the same as the portfolio exit strategy.

Still, it differs in that once your return percentage reaches your set price, you have no choice but to exit the market, even if the market value is still high and looking to go higher. 

An example is when you buy crypto using $100, with an exit return percentage of 70%. So when your $100 becomes $170, you cannot exit.

There are cases where the $100 can become $300. So, even if you have a guaranteed return of $70, you have missed $200. This is usually not the case, but in the crypto space, it is possible. 

You must have a target for your return percentage to use this strategy. Once it reaches this level, you exit the crypto market and re-enter if you want. This is great for short-period investments.

4. Dollar-cost average out

Dollar-cost averaging (DCA) is a method of investing by which an investor purchases a fixed amount of an asset (usually shares or securities) regularly at regular intervals. It is based on the premise that gains will average to zero in the long run, and losses will average down.

In cryptocurrency investing, dollar-cost averaging is used to hedge against unforeseen drops in crypto prices.

This crypto exit strategy is a simple way to avoid the most common pitfalls of investing in cryptocurrencies. This strategy involves consistently investing a fixed amount of money into your portfolio. For example, if you want to invest $1,000 monthly for three months, you would invest that amount each month.

Dollar-cost averaging is a great option because it allows you to buy low and sell high without taking too much risk when trading cryptocurrencies. It also ensures that you’re always buying at the lowest possible price for each coin, which reduces the chance of missing out on big gains as prices rise over time.

5. Exit by cycle

This crypto exit strategy works in a more stressful way than the other strategies mentioned above. To use this strategy, you must assess the crypto market performance cycle and know the best time to exit the market by selling off crypto holdings. 

This strategy usually has four stages, each of which comes with perks. Understanding how each stage works and impacts the Crypto market cycle is essential in using this strategy. 

The four stages in this strategy are: 

• Accumulation
• Markup
• Distribution
• Markdown

If you can exit by cycle, you will make money every time. In other words, you will make money when the price goes up and as soon as it goes down. The advantage of this strategy is that it does not require a lot of patience.

For example, if you have invested in Bitcoin for $1,000 and it has gone up to $4,000 within a year, you can sell it and make a $3,000 profit.

However, there are some disadvantages to this strategy. Firstly, it is impossible to keep track of the entire market cycle; second, it requires a lot of time for research. In addition, this strategy may not suit your needs if you do not have enough experience with cryptocurrencies or trading platforms.

Remember, in the crypto market, no two market cycles are similar. So, to make a highly informed decision, there is a need for continuous market research. 

Why Do You Need a Crypto Exit Strategy?

Your exit strategy is the last thing you need to worry about. You’re already in it for the long term, so why not make your exit as easy as possible?

Here are a few strategies that can help you maximize your profits:

Could you keep it simple?

If you want to exit, then keep it simple. The less complicated your investment portfolio and business model are, the easier it is to make your money work for you. This means focusing on one or two businesses where you can create value for customers and investors.

Keep it small

A small investment portfolio makes trading less risky and more profitable over time. Suppose you have a lot of money invested in one or two companies. In that case, this can become risky if there are any problems with those companies or if they fail to deliver on their promises.

Set realistic expectations

Most investors know they will lose some money when they invest in public markets — but many don’t realize how much they stand to lose until they have invested their money into a new business venture or project. Make sure that whatever company or project you choose is feasible before making an investment decision.

How Do You Pull Out of a Crypto Market?

It’s a question that’s on the minds of many crypto investors. How do you pull out of a crypto market?

Pull out via Crypto exchange.

The answer depends on how much cash you have tied up in your digital assets and what you want to accomplish with them. Suppose you want to sell some of your holdings. In that case, it’s a simple process that requires one action: You must transfer funds from your wallet or exchange account to another address.

But it can be much more difficult if you’re looking for a way to get yourself out of the market. There are no easy solutions for this exit strategy, but some options might help.

Pull out via Fiat currency.

Suppose you’re looking for an easy way out and don’t want to deal with complicated exchanges. In that case, fiat currency is often the best option. You can convert any Bitcoin or other coins into dollars or euros and then withdraw those funds from your bank account once your investment reaches a specific price point. This will require some effort on your part and likely cause some inconvenience. Still, it may be worth it if you no longer worry about price volatility.

The crypto market value of a crypto asset is volatile. They are also highly speculative, so they aren’t for everyone.

If you don’t have the stomach for the crypto rollercoaster ride, it’s time to get out before it’s too late.

Move quickly

If you’re holding assets in crypto exchanges like Coinbase, there are various ways. For example, suppose you have fiat currency (like dollars or euros) in your Coinbase account. In that case, you can sell those assets and transfer the money into your bank account. You’ll want to do this quickly before the current market value increases.

Transfer your crypto assets from exchanges back into your personal wallet if you bought them using USD and not BTC or another fiat currency — that way, if the market price goes down, you won’t have to lose any money.

You can also convert your crypto into other cryptocurrencies without having to move it all at once — but remember that these conversions take time. 

When should I exit crypto investment after the initial investment return?

The best time to exit crypto will depend on your investment goals and risk tolerance. If you are looking for short-term gains, you may want to sell your investment as soon as you reach your price target. However, suppose you are looking to hold your investment long-term. You may want to wait for more favorable market conditions in that case.

It is also important to consider the fees associated with selling your investment. Some exchanges charge high fees for making trades, so you may want to factor this into deciding when to sell.

Conclusion

Investing in cryptocurrencies is quite interesting when you know what you are doing. You can use it for quick profit or long-term profits. If you’re in it for the long haul, don’t worry. The first step is to identify your exit plan and the type of exit plan.

The second step is to find out whether you should be entering the cryptocurrency market in the first place. Once you have all this and decide to enter the market, you will start seeing potential gains before long.