With the plunge in cryptocurrencies like Bitcoin in 2022, you may be wondering how to exit your investment. Despite the downturn in the crypto market, the good news is that traders have several ways to get US dollars for their digital cash, although some organizations have blocked investors from cashing out their crypto for real money. .
If you are selling an asset, you will want to understand the tax implications. You may owe a bundle if you book a capital gain, and the tax rate will depend on the holding period, among other things. Of course, you may be able to request a write-off if you are selling at a loss. But if you think the crypto can rebound, it might be better to stay and wait for the downturn.
Here are five ways to cash out your crypto or Bitcoin.
1. Use an exchange to sell cryptos
One of the easiest ways to cash out your cryptocurrency or Bitcoin is to use a centralized exchange such as Coinbase. Coinbase has an easy to use “buy/sell” button and you can choose the cryptocurrency you want to sell and the amount.
You will quickly exchange cryptocurrency for cash, which you can access from your cash balance in Coinbase. From there you can transfer the money to your bank account if you wish.
And while Coinbase is a popular option for selling cryptocurrency, it’s probably more worthwhile to go with any exchange that currently holds your coins, if you don’t have custody of the coins yourself. Some of the major exchanges include Binance, FTX, and Kraken.
2. Use your broker to sell cryptos
If a broker holds your cryptocurrencies, the easiest route is to simply go with that broker. For example, if you are a client of Robinhood or Webull, both of which allow extensive crypto trading, then it will be easier for you to just execute a trade on their platform and be done with it.
After completing the trade, you will have the money in your account and be ready to trade again.
3. Opt for a peer-to-peer exchange
You can also perform a direct exchange, selling your cryptocurrency directly to another person through another entity. The most popular way is through an online peer-to-peer platform that allows sellers to find the best deals through an exchange, although it can even be done in person if needed.
With peer-to-peer e-commerce, you can sell cryptocurrency online in exchange for dollars. These transactions are often facilitated by an exchange, and Binance runs a well-known online peer-to-peer platform called Binance P2P. After accepting a trade, the platform escrows your crypto. Once you have verified the transaction record in the payment account and ensured that you have received the money from the buyer, Binance will deliver the crypto to the buyer on the platform.
Another popular option is the Paxful online platform. Sellers have the ability to set their own rates and can choose from over 300 payment options, such as cash, gift cards, or other digital currencies. Customers can sell directly to more than 3 million users worldwide, according to the platform’s website.
4. Cash out at a Bitcoin ATM
Cashing in at an ATM is equivalent to selling your Bitcoin, says California-based bitcoin ATM company Hermes Bitcoin. Bitcoin ATMs are a way to get immediate access to cash using your bitcoins. Bitcoin ATMs do not work like traditional ATMs. In order to perform a cash withdrawal 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 receive your money.
However, commissions on Bitcoin ATM transactions can be extremely high, so it’s important to note how much you’re paying and whether it’s worth going another route.
5. Exchange one crypto for another, then cash out
Some exchanges do not allow certain cryptos to be converted or sold for dollars, so you will have to take an indirect route to get your money. Depending on the exchange you use, you may need to transfer or convert your cryptocurrency to another popular currency such as the stablecoin Tether, before finally converting to dollars.
At the end of the line
Traders have several ways to sell their cryptocurrency. Popular crypto exchanges are always a good bet, as they are reliable and well-known, while online platforms with peer-to-peer selling can allow payment flexibility. You can take the more convenient route and use a Bitcoin ATM to get quick access to your crypto, but at a significantly higher commission.