With cryptocurrencies like Bitcoin plummeting in 2022, you might be wondering how to get out of your investment. Despite the downturn in the cryptocurrency market, the good news is that traders have multiple ways to get dollars for their digital currencies, although some organizations prevent investors from withdrawing their cryptocurrencies for real money.
If you are selling an asset, you should understand the tax implications. If you book capital gains, you can owe a lot of money, tax rates depend on the holding period etc. Of course, if you sell at a loss, you may be able to claim a write-down. However, if you think the cryptocurrency can bounce back, it might be better to stay here and wait for a downturn.
Here are five ways to cash out your cryptocurrency or bitcoin.
1. Use an exchange to sell cryptocurrencies
One of the easiest ways to withdraw cryptocurrency or bitcoin is to use a centralized exchange like Coinbase. Coinbase has an easy-to-use “buy/sell” button where you can choose the cryptocurrency you want to sell and how much to sell.
They quickly convert cryptocurrencies into cash, which you can get from your Coinbase cash balance. From there you can transfer money to your bank account if you wish.
While Coinbase is a popular choice for selling cryptocurrencies, if you don’t own the tokens yourself, it may be most useful to contact the exchange that currently holds your tokens. Some of the top exchanges are Binance, FTX and Kraken.
2. Use your broker to sell cryptocurrencies
If a broker holds your cryptocurrency, the easiest way is to contact that broker. For example, if you are a customer of Robinhood or Webull, both of which offer a wide range of crypto trading, the easiest thing you can do is to execute the trade on their platform and complete the trade.
After completing the transaction, you have funds in your account and you can start trading again.
3. Conduct peer-to-peer transactions
You can also make a direct trade and sell your cryptocurrency directly to another person through another entity. The most popular way is through peer-to-peer online platforms, which allow sellers to find the best deals through exchanges, but even in person if desired.
With online peer-to-peer transactions, you can sell cryptocurrencies online in exchange for U.S. dollars. These transactions are usually conducted through exchanges, and Binance operates a well-known online peer-to-peer platform called Binance P2P. After you agree to trade, the platform deposits your cryptocurrency. Once you have verified the transaction history in your payment account and ensured that you have received the buyer’s money, Binance will release the cryptocurrency to the buyer on the platform.
Another popular option is the online platform Paxful. Sellers can set their own rates and choose from over 300 payment methods including cash, gift cards or other digital currencies. According to the platform’s website, customers can sell directly to more than 3 million users worldwide.
4. Withdrawing from Bitcoin ATMs
Withdrawing money from an ATM is the equivalent of selling your bitcoins, according to Hermes Bitcoin, a California-based bitcoin ATM company. A Bitcoin ATM is a way to instantly get cash using Bitcoin. Bitcoin ATMs do not work like traditional ATMs. To withdraw cash and sell your bitcoins at the ATM, the machine provides a QR code to which you can send your bitcoins. You just wait a few minutes and get your money.
However, commissions for trading Bitcoin ATMs can be prohibitively high, so it’s important to consider how much you’re paying and whether it’s worth going the other route.
5. Exchange one cryptocurrency for another and cash out
Some exchanges do not allow certain cryptocurrencies to be exchanged or sold for USD, so you will have to take an indirect route to get your funds. Depending on the exchange you use, you may need to transfer or exchange your cryptocurrency into another popular currency, such as the stablecoin Tether, before you can finally convert it to U.S. dollars.
There are multiple ways for traders to sell their cryptocurrencies. Popular cryptocurrency exchanges are always a good choice as they are reliable and well known, while online platforms with peer-to-peer sales allow for payment flexibility. You can take the easy route and use a Bitcoin ATM to quickly access your cryptocurrency, but the commissions are much higher.
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