How To Cash Out Your Crypto Or Bitcoin
With cryptocurrencies like Bitcoin plummeting in 2022, you may be wondering how to get out of your investment. Despite the downturn in the crypto market, the good news is that traders have a number of ways to get US dollars for their digital money, although some organizations have prevented investors from withdrawing their cryptos for real money.
If you are selling assets, you should understand the tax implications. If you book a capital gain, you may owe a bundle and the tax rate depends on the holding period, among other things. Of course, you may be able to claim a write-down if you sell at a loss. But if you think crypto could rally, it might be better to stay here and wait out the downturn.
Here are five ways you can cash out your crypto or bitcoin.
1. Use an exchange to sell crypto
One of the easiest ways to withdraw your cryptocurrency or bitcoin is to use a centralized exchange like Coinbase. Coinbase has an easy to use “buy/sell” button and you can choose which cryptocurrency you want to sell and for what amount.
They quickly convert cryptocurrency into cash, which you can access from your Coinbase cash balance. From there you can transfer the money to your bank account if you wish.
And while Coinbase is a popular option for selling cryptocurrency, if you’re not holding the coins yourself, it’s probably most useful to contact the exchange that’s currently holding your coins. Some of the top exchanges are Binance, FTX and Kraken.
2. Use your broker to sell crypto
If a broker is holding your crypto coins, the easiest way is to contact that broker. For example, if you are a client of Robinhood or Webull, both of which offer extensive crypto trading, then the easiest thing for you to do is simply execute a trade on their platform and be done with it.
After you complete the trade, you have the money in your account and you can start trading again.
3. Make a peer-to-peer trade
You can also make a direct trade and sell your cryptocurrency directly to another person through another entity. The most popular way is through a peer-to-peer online platform, which allows sellers to find the best deals through an exchange, although one could even do it in person if needed.
With an online peer-to-peer trade, you can sell cryptocurrency online for dollars. These transactions are often facilitated through an exchange, and Binance operates a well-known online peer-to-peer platform called Binance P2P. After you agree to a trade, the platform deposits your crypto. Once you verify the transaction record in the payment account and make sure you received the money from the buyer, Binance releases the crypto to the buyer on the platform.
Another popular option is the online platform Paxful. Sellers have the ability to set their own rates and choose from more than 300 payment options such as cash, gift cards or other digital currencies. According to the platform’s website, customers can sell directly to over 3 million users worldwide.
4. Withdraw from a Bitcoin ATM
Withdrawing from an ATM is the equivalent of selling your Bitcoin, says California Bitcoin ATM company Hermes Bitcoin. Bitcoin ATMs are a way to get instant access to cash using your bitcoins. Bitcoin ATMs do not work like traditional ATMs. To withdraw cash and sell your bitcoins at the ATM, the machine provides a QR code to which you send your bitcoins. You just wait a few minutes and get your money.
However, Bitcoin ATM transaction commissions can be prohibitively high, so it’s important to consider how much you’re paying and whether it’s worth going another route.
5. Exchange one crypto for another and then cash out
Some exchanges do not allow some cryptos to be exchanged or sold for dollars, so you will have to take an indirect route to get your money. Depending on which exchange you use, you may need to transfer or exchange your cryptocurrency to another popular currency like the stablecoin Tether before finally converting it to dollars.
bottom line
Traders have a number of ways to sell their cryptocurrency. Popular crypto exchanges are always a good choice as they are reliable and well-known, while online platforms with peer-to-peer selling can allow for payment flexibility. You can take the easy route and use a Bitcoin ATM to get quick access to your cryptocurrency, but at a significantly higher commission.