Trading crypto can be exciting, challenging, and even profitable! But what happens with all the gains you make from your crypto investments? Do they just sit in your portfolio forever?
Although this is an option, traders should always have the chance to cash out their crypto whenever they want to. This allows you to enjoy any profits you make through cash rather than cycling all your profit through additional trades.
Thankfully, crypto traders have several options for converting their crypto into cash. In this article, we’ll discuss each of these options and give examples of the best places to cash out your crypto right now! We’ll also cover things to be aware of before trading and reasons why you may choose to cash out your crypto. Let’s dive in!
Best Crypto Cash-Out Options Quick Guide
If you don’t want to hang around and read the full article, check out our quick guide for the best options for cashing out crypto in 2023!
- A centralised exchange
- A peer-to-peer exchange
- A broker (using a crypto platform)
- A crypto debit card
- A Bitcoin ATM
Why Should I Cash Out Crypto?
There’s no reason why you should cash out your crypto, but you may want to do so for numerous reasons. The most obvious reason why you’d want to is to enjoy any gains you’ve made from your holdings. You can trade your crypto for cash and use it to make transactions or put it into a savings account.
Alternatively, you may need quick access to cash, which is why you’ve decided to sell crypto from your portfolio. In this case, you’ll need a fast and cost-effective option to ensure you can cash out your crypto as fast as possible without paying substantial fees (we’ll discuss this further in the next article).
Remember, you don’t need to sell all your crypto at once! Many experts suggest just cashing out around 30-40% of your total portfolio at a time so you still have a chance to profit from your remaining crypto holdings.
What Should I Be Aware of Before Cashing Out Crypto?
Before you go ahead and start cashing out your crypto, there are a few things you need to be aware of. Cashing out crypto has a few implications that, although not too serious, are still worth considering before making any decisions.
For a start, you may have to pay capital gains tax on your crypto when withdrawing it. This will highly depend on the specific rules in your country of residence, so do your due diligence beforehand. Paying taxes after selling Bitcoin and other crypto is usually the standard, especially if you’ve profited from your trades.
On the other hand, if you’re selling your crypto holdings at a loss, you may be able to offset capital gains from your alternative investments. Whatever your situation, you should check your country’s revenue service before withdrawing any crypto.
Additionally, you should be aware that you may have to pay transaction fees when cashing out your crypto assets. These fees will vary between each method, so be sure that you understand how much you’ll have to pay. The size of a transaction fee can also depend on how much crypto you’re withdrawing at once, the type of bank account you own, and which type of crypto you possess.
Overall, as long as you understand that you may have to pay taxes and transaction or trading fees when withdrawing crypto, you shouldn’t encounter any unwanted surprises!
Our Top Recommendations for Cashing Out Crypto in 2023
Now you know why you may want to cash out crypto and what you need to be aware of before doing so, you’re ready to choose a method! So, in no particular order, here are the five best places you can use to cash out Bitcoin and other crypto!
1) A Centralised Exchange
Example – Kraken
A centralised crypto exchange is a regulated and simple method for cashing out your crypto. Acting as an intermediary between buyers and sellers, these exchanges earn revenue through commissions and fees by facilitating transactions. This means that you may have to pay additional fees. However, you’ll be supported by the exchange as you cash out Bitcoin and other crypto.
Centralised exchanges provide plenty of other services that you can benefit from when investing in cryptocurrency. They are also extremely reliable and user-friendly, making them highly suitable for inexperienced traders.
However, the drawback of using a centralised exchange to cash out crypto is the inclusion of extra fees. Additionally, using a centralised exchange can also be considered the least private option. This is because users are required to complete Know Your Customer (KYC) checks and other personal identification processes.
2) A Peer-To-Peer Exchange
Example – Binance P2P
As the main alternative to centralised exchanges, peer-to-peer (P2P) exchanges are a low-cost, transparent, and private method for converting crypto to fiat money and other currencies. If you want to sell Bitcoin and other crypto but you want to do so on your own terms, then you’ll benefit the most from using a peer-to-peer exchange.
Peer-to-peer selling allows traders to negotiate prices with others without requiring a third party. This can be more time-consuming compared to other methods on our list. However, it’s the best way to reduce additional fees when converting crypto. Traders also don’t have to complete any identification checks, such as KYC, when using this method.
It’s also worth noting that a fair amount of trading knowledge is necessary to successfully use a peer-to-peer exchange. If you’re a newcomer in the trading world, then you may choose a centralised exchange over a P2P one.
3) A Broker (Using a Crypto Platform)
Example – Bitcoin Prime Platform
If you’re not interested in using an exchange, or you want additional support on top of your crypto withdrawals, then using a broker may be your best option. A broker acts as the middleman between traders and the trading market. They not only facilitate the withdrawal of cryptocurrency and other digital currencies, but they also offer helpful resources for traders. This makes brokers ideal for beginner traders who require guidance as they make investment decisions.
To avoid falling for a scam, prevent yourself from wasting unnecessary time, and ensure you’re connected with a suitable broker, we suggest using a crypto platform such as the one we’ve mentioned above (Bitcoin Prime)! These platforms use AI technology to pair traders with brokers they are most compatible with.
After your platform has connected you with a broker, you can discuss with them how much crypto you want to buy, sell, or trade. There are also plenty of other tools your broker will provide that you can use to practise trading and build confidence as you manage your portfolio.
4) A Crypto Debit Card
Example – BitPay
If you want to swiftly make crypto transactions on the go, then a crypto debit card can be a terrific option for you. A crypto debit card can be used as a payment method for transactions using your crypto funds. These cards allow users to easily convert crypto to buy goods and services across millions of locations.
As you can probably guess, you can use a crypto debit card the same way you would use a normal debit card. However, crypto debit cards provide additional privacy and flexibility, especially for crypto traders. All you need to do is create an account on a crypto debit card platform such as the one we’ve linked above. Then you can check your balance, add funds, and use the card to make withdrawals.
A cryptocurrency debit card is generally one of the most cost-effective ways to withdraw cash using crypto. This is because these cards usually have favourable exchange ranges, and some even offer cash back and purchase rewards for users. Although it varies between each provider, most crypto debit cards support popular cryptocurrencies, including Bitcoin, Ethereum, Tether, Ripple, and Solana.
5) A Bitcoin ATM
Example – Bitcoin ATM map
A Bitcoin ATM, similar to a normal ATM, is a physical machine that anyone can use to withdraw funds. Despite their similarities, you wouldn’t use a Bitcoin ATM the exact same way as a traditional one. For a start, Bitcoin ATMs don’t connect a user to their bank account or show their cash balance. Instead, they will connect with the user’s digital wallet to process any transactions.
These transactions are recorded on the blockchain and allow users to withdraw fiat money using their crypto holdings. As the name implies, Bitcoin ATMs typically allow users to cash out Bitcoin. However, many of these ATMs also support a handful of other cryptocurrencies, such as Ethereum, Ripple, Tether, and Bitcoin Cash.
There are already thousands of Bitcoin ATMs dotted in cities worldwide. You can use a map such as the one we linked as an example to find an ATM close to you. If you’re lucky enough to live somewhere where you can easily access a Bitcoin ATM, this method is a highly convenient option for withdrawing cash using your crypto!
Now that you know all the best places to cash out crypto, you just need to decide which option is best for you! This will vary between each trader as we all have different priorities when it comes to withdrawing or converting our crypto funds. For example, if you want to spend as little as possible when cashing out crypto, we suggest using a peer-to-peer exchange or a broker. These options have the fewest transaction fees, so you don’t have to worry about forking out any extra cash when using your crypto to get cash or other currencies.
On the other hand, if you need a fast and convenient way to cash out your crypto, then we recommend using a Bitcoin ATM or crypto debit card. The convenience of a Bitcoin ATM will depend on where you’re located, but if you’re in or near a big city, then you should have one nearby. Similarly, crypto debit cards are easy to use and can be a quick way to use your crypto for purchases.
Whichever method you decide to choose, just remember to do your own due diligence, be aware of possible tax implications, and always seek professional help when needed!