How to Know When to Sell Crypto?
Investing in the crypto market can be a very unique experience, one that provides a lot of opportunities to turn a profit if you plan ahead. While buying crypto is easy enough, the real problem comes with selling crypto - or, more specifically, knowing when you should sell it.
Having a diverse and high-value crypto portfolio will not mean much if you're not very good at selling crypto at the right time. Considering how volatile the crypto market can be in many cases, it is important to understand that you can't just treat it like the stock market: cryptocurrency is a whole other beast.
So, how are you supposed to know when to sell crypto, and what can you do to turn a larger profit on average? The more you know about selling at the right time, the easier it becomes to avoid unexpected losses or sub-par profits that might kill your crypto-trading momentum.
Crypto and Stock Market Cycles
Market cycles are the heart of all cryptocurrency markets. These are cycles of upwards trends followed by large dips in value, often taking several years to fully complete and "reset". Exchange platforms like coinpass offer a lot of statistics detailing how these cycles work, as well as ways to see where each cryptocurrency currently is within its own cycle.
A market cycle is basically the space between the highest and lowest market cap of a cryptocurrency and usually occurs due to the actions of the people buying and selling it. Crypto value will rise and fall based on overall interest in the currency, as well as the amount people are actually selling it for.
These cycles are not an exclusive mechanic to just crypto, but they are most noticeable through crypto trading. Since crypto is usually decentralized and has no main authority or management team, there is no course-correcting.
The Upwards Trend
For example, most currencies see an upwards trend as people begin to initially invest, going from sceptical optimism to a more defined kind of belief in the coin. This draws more buyers, increasing the value and pushing the opinion of the currency even higher as a result.
Less experienced traders often assume that this spike in value will continue forever, but it actually gets riskier and riskier as it approaches a higher peak. This usually leads to a massive amount of interest as the currency becomes the "next big thing" eventually reaching a kind of critical mass. (read more: https://coinpass.com/en/blog/academy/how-to-know-when-to-sell-crypto)…
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