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One of the most common misunderstandings about cryptocurrencies is that these investments are hard to cash out. While that might have been true back when Bitcoin first hit the market, these days, there are multiple avenues to cash out cryptocurrencies.
The crypto market experienced a significant downturn towards the end of 2022 but looks to be slowly recovering. Whether you are looking to move some assets around in case things take a turn for the worse or you want to get some extra cash now, selling some of your Bitcoin is easier than ever.
This article explains a few options to cash out your cryptocurrencies and a few points to consider before you do.
Cashing Out Bitcoin – 2023
When it comes to cashing out bitcoin, you have many options, including debit cards, apps, ATMs, and online brokers. Finding the one that works best for you will depend on fee structures, convenience, and personal preferences. The options are as follows.
With many popular online brokers offering crypto trading, you have the ability to sell your crypto for cash if you purchase it through one of these platforms. If you use Robinhood or eToro, you can buy and sell several cryptocurrencies on an exchange.
A downside to using online brokers is that you can’t transfer cryptocurrencies from other platforms; you can only sell what you’ve bought on the platform. For you to be able to sell Bitcoin for cash, you must have it on the platform. Consequently, you cannot move Bitcoin from a digital wallet to an online brokerage account if you hold it on a crypto exchange.
The trading fees for selling crypto are usually reasonable at online brokerages. The trading fee on eToro, for example, is 1%, which is fairly low. Crypto trading fees on Robinhood are not disclosed, but they average around 0.50%.
Bitcoin (and other cryptocurrencies) can be converted into cash with the help of centralized crypto exchanges. Exchanges offer the most flexibility when it comes to cashing out your crypto because they support hundreds of coins and multiple fiat currencies, and they provide low trading fees.
However, there is a catch. When you use a crypto exchange’s “sell my crypto” option, you will typically be charged a high fee. For example, Coinbase charges $0.99 when selling under $10 worth of crypto (nearly 10%), and around 1.50% when selling larger amounts. To get around this, you need to sell your crypto using their “Advanced Trade” platform, with fees as low as 0.6%.
If you want to save on fees and quickly cash out your crypto for dollars, you can use a platform like Binance.us or FTX.us. Both platforms have mobile apps that make it easy to sell, and they allow you to connect your bank account to transfer funds.
Crypto Debit Card
In recent years, crypto debit cards have become more popular, with many crypto exchanges providing them for spending your saved crypto balance. With these Debit cards you can simply swipe the card for regular purchases. Your crypto will be converted to cash based on the currency you hold on the exchange.
For example, Coinbase’s VISA debit card lets you spend your crypto balance, automatically selling the crypto you choose and exchanging it for cash. Coinbase cards can also be used at ATMs to withdraw up to $1,000 per day if you need cash. Furthermore, you can receive crypto rewards from Coinbase.
However, crypto debit cards have a downside: the high fees associated with selling crypto for cash at ATMs. You can look for a card with lower fees, such as Crypto.com’s VISA debit card, though the ATM limit for withdrawals may be lower.
P2P Trading Exchange
In keeping with its peer-to-peer roots, you can exchange Bitcoin for cash directly with another individual by using a peer-to-peer (P2P) crypto exchange.
Using a P2P crypto exchange has a few advantages, including the following.
You don’t need to verify your identity when selling through a P2P exchange, unlike most exchanges and apps.
With a large portion of P2P exchanges, you can negotiate the price with the buyer.
Peer-to-peer exchanges require you to send Bitcoin (or other crypto) directly from your digital wallet to other users. The payment will be deposited into your bank account through PayPal, Zelle, or other online platforms.
Among the most popular peer-to-peer exchanges are:
Binance, KuCoin, and ByBit are some centralized exchanges that offer P2P exchange options.
One caveat of this option is that you risk losing your funds on P2P exchanges, since you send Bitcoin, but do not receive cash, and it takes time to sell since you need to find a prospective buyer and negotiate a price.
Bitcoin ATMs are popping up around the world, with tens of thousands of them already installed and allowing you to buy crypto with a digital wallet or cash at a physical booth – typically located in a gas station or grocery store. You can purchase Bitcoin directly from most crypto ATMs, but only some allow you to sell it for cash.
You can find a crypto ATM near you by using an app like Coin ATM Radar. Selecting the “sell” option will only search for ATMs that accept crypto for sale.
To use one of these ATMs, you will use the following steps:
- choose to sell Bitcoin (or another crypto)
- provide identification documentation (such as your driver’s license)
- open the wallet that you want to use
- send Bitcoin to the ATM address by scaning the QR code on the Bitcoin ATM
- the ATM will disburse cash once the Bitcoins have been sent
One of the downsides of Bitcoin ATMs is the high fees they charge. For instance, you can be charged as much as 15% per transaction. Bitcoin ATMs provide a quick way to access physical cash by selling your crypto, but the cost of using them is high.
Crypto Wallet with Built-In Exchange
You can exchange crypto for cash in many crypto wallets, and some have built-in crypto exchanges. The purpose of crypto wallets is to store and secure your crypto, but many of them also provide trading services through crypto exchanges.
Some hardware wallets allow you to sell Bitcoin for cash. With Ledger Live, you can trade crypto for cash, and Coinify partners with Ledger to facilitate crypto exchange. Ledger Live currently only supports Bitcoin selling.
Another option is Trezor, which offers crypto-to-fiat transactions through its “Trezor Suite.” They offer this service in partnership with Simplex and other third-party providers.
Selling from your crypto wallet has the downside of fees. The fees charged by third-party exchanges and fiat gateways when converting crypto into cash are between 3% and 5%. This is a decent option if you need cash and don’t want to send your Bitcoin to an exchange.
Businesses that Accept Crypto
Some businesses allow you to withdraw coins directly from your digital wallet for regular purchases. The majority of retail businesses now accept Bitcoin (and some other cryptocurrencies) as a form of payment. For example, Tesla accessories can be purchased with Dogecoin.
Many businesses offer “Buy with Bitcoin” options at checkout as Bitcoin becomes more prevalent worldwide. The Bitcoin symbol can be found on checkout pages of stores that accept Bitcoin, or on storefronts of businesses that accept it.
The retailer’s digital wallet must be credited with Bitcoins before purchases can be made. The Bitcoin wallet address can be typed into your digital wallet, and the amount requested can be sent.
When you make purchases with Bitcoin, your crypto does not directly become cash, but it allows you to use it as you would cash. When cryptocurrencies are volatile, network fees can be high when sending crypto over the blockchain.
Money Transfer Apps
It’s no secret that most money transfer apps now support crypto purchases and sales. Crypto exchanges are built into apps like Cash App and PayPal, making it easy to purchase crypto as well as cash out.
This app allows you to cash out your crypto, but you need to already hold it within the app. To sell crypto, you cannot transfer cryptocurrency from another app into the app. Cryptocurrency can be sold if you hold it within a money transfer app like Cash App, PayPal, or another. It’s usually pretty reasonable to pay a fee within the app.
Before You Sell
While there are a lot of different paths you can take to sell your Bitcoin or any other cryptocurrency, there are a few caveats you need to consider beforehand. The following are the most important considerations to think about before selling your crypto.
The fees associated with selling crypto for cash are typically higher than you think. For instance, ATMs can charge rather high fees, which can lower your overall profits, so whenever you sell crypto for cash, check the fees first. It’s common for services to list the total fees separately so you know if it’s worth it or not. Generally, centralized exchanges and online brokers offer lower prices than other services for selling crypto.
Your Investment Portfolio
Crypto markets are volatile, making it easy to want to sell when things look gloomy. You may suffer a high opportunity cost if you sell when the markets are down, so if the news says “Bitcoin is dead” for the 1,400th time, don’t panic-sell crypto as part of a larger, diversified investment strategy. Investing is more about long-term goals than short-term emotions, so be level-headed when choosing your strategies.
As property, cryptocurrency is taxed the same way as buying or selling stocks or real estate in the United States and most other countries. You may owe taxes on the gain in price from selling your Bitcoin at a higher price if you bought it at a lower price.
To determine your tax situation before selling your crypto, you might consider using crypto tax software that tracks your digital wallets and accounts automatically. A tax professional should also be consulted before buying or selling assets.
Cryptocurrency traders can sell their coins in a variety of ways. Choosing popular crypto exchanges is always a good bet since they are reliable and well-known, while using peer-to-peer platforms may provide more flexibility in payment methods. For fast access to your cryptocurrency, use a Bitcoin ATM, but the commissions are significantly higher.
Whichever option you choose, remember to consider their fees and how you will report these exchanges come tax season.
WeInvests is a financial portal-based research agency. We do our utmost best to offer reliable and unbiased information about crypto, finance, trading and stocks. However, we do not offer financial advice and users should always carry out their own research.Read More