In the Crypto Winter, How Do You Know When to Sell Crypto?

It’s been a rough year for cryptocurrency.

Bitcoin is down nearly 65% ​​from its 2022 peak in early January. Major exchanges are filing for bankruptcy. Calls for regulation are mounting.

The so-called “crypto winter” is starting to feel more like a crypto apocalypse.

Millions of everyday investors who sank money into cryptocurrency are facing a painful dilemma: Is it time to cash out of crypto?

It can be difficult to know when to cut your losses as an investor. But an investment objective can make that decision easier.

People usually create an investment objective before they purchase an asset. If you don’t already have one, now is a good time to create it.

What Is an Investment Objective?

An investment objective outlines why you think a particular asset is worth buying — and at what point you should sell.

Experienced investors may draft an investment thesis that’s several pages long. But you can keep yours simple.

Consider these questions:

  • What cryptocurrency do you own and why do you own it?
  • what is your risk tolerance (conservative, moderate or aggressive)?
  • What’s your time horizon? That is, when do you need to access the money?
  • Does the asset meet your investment goals? Why is this investment suitable for you?
  • Is the return on your investment meeting your expectations?
  • Are you trying to make quick gains, or do you believe in buying and holding for the long term?
  • What criteria will you use to decide when to sell?

How Do You Know When to Sell Crypto?

Some investors create a hard stop-loss as part of their investment objective. Once a stock or cryptocurrency loses 30% of its value, for example, they sell, no matter what.

Similarly, investors looking to make quick crypto profits may decide to sell once the asset gains 10% or 20% in value. Taking at least some profit can act as a hedge against potential losses in the future.

No matter how you define your investment objective, you should never invest more than you’re willing to…

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