When you shouldn't sell crypto
Selling crypto shouldn't be an emotional decision. While this is true with any type of investment, it's especially important to remember with cryptocurrencies, since they can go through such massive ups and downs.
One of the most common mistakes that crypto investors make is panic selling when prices drop. It's often a decision they regret later. They buy when a cryptocurrency is at a high, sell when the price plummets, and then miss out if it bounces back.
Before you make any rash decisions, consider why the price has dropped. Is it a serious issue with that crypto or just the whims of the market? It's certainly fine to sell if you no longer believe the cryptocurrency is a good investment. But if you still think it has long-term value, hang on to it.
Things to consider before selling crypto
Here are the most important things to consider before selling crypto:
How much will you sell? You don't need to sell everything, especially if the crypto has increased in value. You can sell a portion of your holdings to rebalance your portfolio and hang on to the rest if you still think the cryptocurrency will be a winner.
What are the tax implications? If the cryptocurrency has increased in value, you'll owe crypto taxes. It's taxed as long-term gains if you hold the crypto for more than 365 days.
Long-term capital gains have lower tax rates than short-term gains, which are taxed as ordinary income. If you're close to the year mark, consider waiting to sell your crypto until after it passes that long-term gains threshold.
