At the very least, it can be difficult to get into a Bitcoin trade at the right time. Exiting a trade, on the other hand, can be a lot more challenging, particularly if you don't have a plan in place. You risk taking too much money or becoming an unwanted Bitcoin holder if you don't know when to exit a business. You'll need to develop a strong exit plan if you want to invest some of your Bitcoin earnings elsewhere or pay some bills. To help you get the most out of your Bitcoin investment, let's look at some useful Bitcoin exit strategies.
Bitcoin Exit Strategies
Shed off greed
During a bull market, you must decide when to leave the market and take some money for other purposes. Traders are always tempted to let their money ride the wave in order to make more money. Cryptocurrencies, on the other hand, are extremely volatile, and their values can plummet in a matter of seconds, wiping out your income. If you're too greedy, your earnings will vanish easily, and you could end up with substantial losses.
Since the cryptocurrency market is decentralised, you are the sole owner of your digital assets. As a consequence, the success of your trading decisions is directly affected by your trading decisions.
A good way to avoid greed is to withdraw a fixed sum after each profitable investment that doubles your money. The sum withdrawn should not deplete your Bitcoin holdings significantly, but it should be sufficient to pay your bills or invest in other assets. Set price goals and sell a predetermined percentage of your Bitcoin to accomplish this. For example, BTC at 100k sells 10%, BTC at 150k sells 20%, and so on. This strategy allows you to exit the market smoothly by selling less Bitcoin each time it doubles. You can either keep or purchase more BTC to add to your portfolio if it re-enters another bear market.
Be patient
Exiting the market during a bearish trend is risky, and you might lose a lot of money. Don't panic in a bearish market; instead, be patient. Simply wait for the price to plummet when doing technical and fundamental research to predict the next Bull Run. Based on your business research, the next market bounce could take two or three months. When you're certain there's going to be a bull market, you might want to take advantage of it by selling at the highest possible price and exiting the market using an ideal strategy. Don't miss out on a Bull Run because, based on the halving cycle and historical price action, it could take up to 3 or 4 years for it to happen again.
Before you exit, calculate the risk-to-reward ratio.
It's no secret that getting out of a market can be difficult. Take Profit (T/P) and Stop Loss (S/L) levels can be used as a reference before exiting. To determine the best T/P and S/L losses, technical analysis is needed. For a long strategy, the Stop Loss should be slightly below the support level, while the Take Profit should be above the resistance level.
When placing S/L and T/P orders to exit the market, it's recommended that you keep a risk-reward ratio of at least 1:2. The profit-to-loss ratio is determined by dividing the sum you're willing to lose by the profit you want to make. When the risk-to-reward ratio is high, it is safe to exit the market. It can, however, be used with caution and in conjunction with other market exit indicators.
Divide your Bitcoin and Sell in Tranches
Another good way to get out of the market is to divide your Bitcoin, set a single high price goal, and sell in tranches. You can sell your BTC holding in three to five tranches, depending on how quickly or slowly the price approaches your price goal. The more tranches you need to use, the slower the market moves. Selling your BTC holding in tranches allows for a more seamless exit strategy and increases your chances of achieving higher returns.
Divide your Bitcoin and Spread it into Different Exchanges and Platforms
Any serious Bitcoin investor should diversify their assets through many exchanges and channels, such as wallets. This not only spreads the risk of keeping your coins, but it also allows you to benefit from various exit fees. Furthermore, due to increased traffic, exchanges can go down at inopportune times, causing you to miss a perfect market exit opportunity. To prevent such inconveniences, you can use at least 4 to 5 separate exchanges when trading BTC.
Analyze Market Sentiments and Topping Signals
If you want to get out of the business, you need to look at market sentiments to see what other traders are thinking. This is simple to do with Bitcoin sentiment analysis tools, which are typically free or inexpensive. If the general consensus is to sell, now may be the best time to get out of the business.
When analysing topping signals from on-chain results, you must use technical analysis in addition to sentimental analysis. It can track the growth of large pools, the sale of old wallets, and the sale of whales – data is available on many websites. When you pair a topping signal with sentimental analysis, you will get a better idea of whether it's time to leave the market or keep your BTC.
Have a Workable Plan
Finally, devise a feasible strategy. Write down how you plan to leave the market and how much you intend to sell your cryptocurrencies for. It's common advice to base your strategy on your personal goals rather than the current Bitcoin price. What you want to do with the proceeds from your Bitcoin sale should also be included in your strategy. For example, have a short-term plan on where you'll invest or deposit your money before you have a firm grasp of when and where you'll spend your earnings. If you need to reinvest your money in various asset groups, such as real estate or bonds, thorough market analysis is essential to avoid losing your entire investment.
Conclusion
Exiting the market is a crucial skill for any Bitcoin investor, particularly if you intend to reinvest the funds in something other than cryptocurrencies. If you want to take some profits to pay some bills, you can also leave the market. You must have a detailed strategy, use multiple exchanges, and perform both sentimental and technical research to effectively exit the market. Above all, always purchase and never sell all of your Bitcoin holdings unless absolutely necessary.
