How To Cash Out Your Crypto or Bitcoin

With the fall of cryptocurrencies like Bitcoin in 2022, you may wonder how you can get out of your investment. Despite the downturn in the cryptocurrency market, the good news is that there are a number of ways for traders to get US dollars for their digital money, although some organizations prevent investors from cashing out their crypto for real money.

If you are selling any asset, then you will want to understand the tax implications. If you book a capital gain, you may owe a lump sum and the tax rate will depend on the holding period, among other things. Of course, if you sell at a loss, you can request a write-off. But if you think cryptocurrency might make a comeback, it might be better to hang in there and wait out the downturn.

Here are five ways to cash out Crypto or Bitcoin.

1. Use an exchange to sell cryptocurrency

One of the easiest ways to cash out cryptocurrency or Bitcoin is to use a centralized exchange like Coinbase. Coinbase has an easy-to-use “buy/sell” button and you can choose the cryptocurrency you want to sell and the amount.

You will quickly exchange cryptocurrency for cash, which you can access from your Coinbase cash balance. If you want, you can transfer money from there to your bank account.

While Coinbase is a popular choice for selling cryptocurrency, if you don’t hold the coins yourself, it’s best to go with any exchange that currently holds your coins. Some of the best exchanges include Binance, FTX, and Kraken.

2. Use your broker to sell cryptocurrency

If a broker holds your cryptocurrencies, the easiest way is to go with that broker. For example, if you are a client of Robinhood or Webull, both of which allow extensive cryptocurrency trading, you will find it easiest to trade and engage on their platform.

After completing the trade, you will have cash in your account and you will be ready to trade again.

3. Go with peer-to-peer trading

You can also trade directly, selling your cryptocurrency directly to another person through another entity. The most popular way is through a peer-to-peer online platform that allows sellers to find the best deals through an exchange, although they can do it in person if the need arises.

With online peer-to-peer trading, you can sell cryptocurrency online for dollars. These transactions are often facilitated by an exchange, and Binance operates a well-known online peer-to-peer platform called Binance P2P. After agreeing to trade, the platform deposits your cryptocurrency. After checking the transaction record in the payment account and confirming that you have received the money from the buyer, Binance will release the cryptocurrency to the buyer on the platform.

Another popular option is the online platform Paxful. Sellers have the ability to set their own rates and choose from over 300 payment options such as 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. Withdraw cash at a Bitcoin ATM

California-based Bitcoin ATM company Hermes Bitcoin says withdrawing cash at an ATM is equivalent to selling your Bitcoin. Bitcoin ATMs are a way to get instant cash using your bitcoins. Bitcoin ATMs do not work like traditional ATMs. To withdraw cash and sell Bitcoin from an ATM, the machine presents a QR code where you send your Bitcoin. You just wait a few minutes and you will receive your money.

Bitcoin ATM trading commissions can be quite high, so it’s important to note how much you’re paying and whether it’s worth going another route.

5. Trade one crypto for another and then cash out

Some exchanges don’t allow some cryptocurrencies to be converted or sold into dollars, so you’ll have to go indirect to get your cash. Depending on which exchange you use, you may need to transfer or convert your cryptocurrency to another popular currency, such as stablecoin Tether, before finally converting it to dollars.

Bottom line

Traders have a number of ways to sell their cryptocurrencies. Popular cryptocurrency exchanges are always a good bet because they are trusted and well-known, while online platforms with peer-to-peer trading can allow payment flexibility. You can go the easy route and use a Bitcoin ATM to get quick access to your cryptocurrency, but at a much higher fee.

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