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Taking Profits With Crypto? Check These Four Boxes First

Don't sell until after you read

Ah, taking profits. That moment when you sell your crypto for more money than you paid for it! 

Cashing out. Realizing gains. Making money. Call it whatever you want—everybody tells you to do it.

While that’s generally good advice, you may want to take a moment to consider the consequences. I’ve lost a lot of money by taking profits. I think about it every time I look at my portfolio.

I’d hate for you to suffer the same fate.

Never let me stop you from doing whatever you want with your crypto! Read these four tips before you pull the trigger.

1. Recognize the situation

Does your crypto’s price chart look like the one on the left or the right?

If it looks like the one on the left, you're probably selling too low. Sure, you’re up 50% from the bottom and approaching the top of an upswing, but you might want to ride out the volatility unless you really need that money. 

If it looks like the one on the right, okay, go for it, just remember that this market can keep going up way higher than you could ever expect. Prices could double or triple, even during bear markets. Make sure you're prepared to miss out on all that upside.

Of course, you also have to consider market conditions. No worries! I talk about this in my updates for Crypto is Easy premium subscribers (and a little bit in the free content, too).

2. Remember your taxes and fees

Do you live by the mantra “sell half at the first double?” 

Cool. Sell more than that. You need to pay your taxes!

In the US, that’s an extra 10% to 37% of your tokens you’ll have to sell, on top of the ones you already sold “for free.” In other countries, you may have to pay 50% or more to your government.

Isn't that ironic?

You give up more than 55% to 70% of your investment to get back the money you started with and still expect to get a 100x moonshot on the remaining 30%-45% of your investment.

3. Know whose profits you're taking

As great as it feels to have more of your government's money, remember who you’re taking profits from: your future self. 

Look at the possible outcomes of a hypothetical $100 wager, assuming your investment goes up 16x:

If you sell half after the first double in price, you get back your $100 but now you’ve turned your 16x opportunity into an 8x—and that’s before you pay your taxes.

If you sell half with each double, the results are even worse.

For each option, here are your results:

  1. Hold: $1,600 with no taxes

  2. Sell after first double: $800 minus taxes

  3. Sell after each double: $400 minus taxes

Oh, and add fees, too. Trading fees, gas fees, conversion fees, withdrawal fees, or some combination, depending on how you cash out.

Never let anybody stop you from protecting your money. At the same time, you also need to protect your future wealth!

4. Think about hedging your bets 

It's okay to play it safe. Better to come away with something than lose everything! 

You could also consider hedging your bets. Done correctly, you get unlimited upside with less downside risk.

For example, you could take out a short position or buy put options. If the market goes up, you’ll lose some money but you’ll still have your crypto and whatever gains it makes. That way, you’re protected from crashes.

If that sounds hard or risky, you could save cash, buy bonds, or open cheap lines of credit. That way, you can let your crypto grow forever and you’ll have money to buy more once prices drop. Bitcoin’s price can drop 30% to 60% in bull markets (altcoins can drop even more), then go multiples higher. You don’t want to miss out!

When you hedge, you protect your investment and give yourself opportunities to make money when the market goes down. When you take profits, you lose a chance to capture whatever upside comes after the market recovers (and still risk losing the rest of your investment, too).

Bottom line

Taking profits involves risk. If you’re going to do it, appreciate that risk and act accordingly.

You may want to talk to somebody about your specific portfolio or the potential downsides. Some of your altcoins may have bright futures despite their high prices. For other altcoins, this may be the best they’re ever going to get.

Do you want to schedule some time with me? I’m happy to chat—use either of these platforms to connect:

Relax and enjoy the ride!


or to participate.