When trading in cryptocurrency, it’s important that you recognize when it’s time to either sell it at its peak or trade it in for a different type of cryptocurrency entirely.
1. Sudden News Coverage
Cryptocurrencies are remarkably sensitive to news coverage. If your cryptocurrency has suddenly inflated due to news stories, it’s likely at its peak. This means you should definitely sell.
2. Security Flaw Discovered
When major security flaws are found, the price of a cryptocurrency may tank. However, if the price has already been affected by the security flaw, you might as well hold on.
3. Price Steadily Fading
You may find that the price of your cryptocurrency is steadily fading and that there hasn’t been any buzz for a long time. With dozens of cryptocurrencies out there, a slowly declining price without any major communication often means that the cryptocurrency is dying out and that interest will not return.
4. Similar Cryptocurrency Launched
If a new and extremely similar cryptocurrency has come out with at least one major improvement, your holdings may be in trouble. Each cryptocurrency tends to build off another. If a cryptocurrency comes out that is an improved version of another cryptocurrency, it will likely capture the market long-term.
5. Price Skyrocketed
Cryptocurrencies tend to go up dramatically on occasion and then fall. If the price has suddenly skyrocketed, it’s likely to fall again shortly — allowing you to sell high and buy low once again.
6. Major Destabilizations
Anything that threatens the stability of a cryptocurrency should be taken seriously. Cryptocurrency value is very fragile, so there is always the threat that an exchange could go down.
7. Selling encouraged
A cryptocurrency is more susceptible to rumors than traditional currency. Once selling begins, it may become impossible to stop it. If selling is being encouraged throughout the community and the price has started to drop, it’s time to sell.
8. Local Events
If local laws change regarding cryptocurrency or the government begins getting involved in any major way, it’s time to start considering your options. While you may not need to cash out your cryptocurrency immediately, it’s usually a good idea to pull it out of any exchanges or other platforms and keep it closer to home.
9. Promising Cryptocurrency
If a promising cryptocurrency is launched, you have the opportunity to get in on the ground floor. Initial investors make significantly more in cryptocurrencies than late bloomers. Trading in an old currency for a new one is a viable investment option.
10. Losing Interest
You may have lost interest in cryptocurrency entirely and can’t imagine staying with it. If this happens, it’s usually a good idea to cash out. There are hundreds — if not thousands — of individuals that lost incredible amounts of Bitcoin because they forgot about it and then could no longer find their wallet.
11. New Mining Technique Discovered
If a new mining technique is discovered, then current coins may become devalued. When Bitcoin first started, most were mining on CPUs. When GPUs were introduced, the paradigm dramatically shifted. This devalued the coins that existed.
12. Theft Or Scandal
A major theft or scandal can occur. If your cryptocurrency has been compromised, you may want to switch to another one or cash out.
13. Significant Returns
There’s a phrase in investing — never try to catch a falling knife. If you’ve made a significant amount of money over your return and are satisfied, it’s time to sell.