Despite the setbacks of cryptocurrencies like Bitcoin (BTC), year-by-year, crypto has proven time and again beneficial to those who are willing to invest the time and effort to make it work. However, with any strategy in place, you would need to have backup plans. The wisest crypto investors understand that they can’t hold cryptocurrencies for too long due to the risk of a big correction that can wipe their gains overnight.
As such, it is essential that crypto investors have a solid plan employed after a big crypto win. Although it may be tempting to spend money on luxury goods, it’s crucial to recognize that assets like luxury goods (clothing, cars, etc.) depreciate over time. Thus, instead of spending your earnings on depreciating goods, you must consider reinvesting your crypto earnings into other investment opportunities that will net you more profits in the long run.
After scoring large crypto gains, a little bit of intuition and planning can help take your profits and reinvest them to see larger returns on investments (ROIs) in the future. Knowing the timing of entering and leaving markets to maximize profits and cut losses is the secret to a successful crypto trading strategy. Because of the uncertainty that the crypto market presents, your decision can mean how much profit you’ll get or how much you’ll lose.
For example, Bitcoin has gone from as low as around $4000 to as high as $20,000 in just a few months. Some traders lose so much due to their greed in hoping for another 10x increase. You don’t need to be like them. As the principle in markets goes, after a bullish run, a bearish market will soon follow.
Taking and Reinvesting Crypto Profits
With that, the question remains: when should you take and reinvest the profits in crypto? Without a solid and clear goal, it may initially feel tricky to know a good time to take your profits out. But with solid planning, it may be a good problem to have because it assumes you have profits to begin with.
For the first step, it is highly recommended to use an online tool that can maximize your crypto profits. Consider using real-time calculations of a crypto profit calculator within the planning and projection stage of your crypto strategy. Ask yourself the basic question: is this profit enough or would I need more?
Taking your profits can be tricky without a solid foundation to work on. Of course, more would always be better when it comes to the accumulation of profits, but when it comes to trading whether it is Bitcoin or any other cryptocurrencies, knowing when to stop is essential to having a well-laid crypto plan.
The Reason for Buying this Coin
If you want to optimize your crypto investments and understand when to take out one, you need to ask this question first and foremost: why did I buy this coin, to begin with? What is your motivation behind buying this crypto?
As such, the difference between stocks and cryptocurrency’s value is that stocks are more concrete while crypto relies on their perceived value of people. While stock investors invest on the basis of a company’s valuation and technical analysis, cryptocurrencies, on the other hand, are like investing in the future of a community that believes in a specific crypto that may or may not be valuable. That is why there are inherent risks involved in crypto investing.
In an ideal setting, before buying into a coin, you should be equipped with a more substantial reason than just buying into the thrill or hype of the said coin. For example, if you think Bitcoin is something to believe in that will cause you long-term gains, then perhaps you can stay true to its course and invest based on market conditions. For instance, you can take profits if the outlook of the market may seem that an impending bear is coming and that does not bode well for you.
However, if you realized that you bought a shiny new coin out of the hype and thrill of it or because it had a catchy name or due to its popularity at the time, then it may be worthwhile to reconsider your investment strategy. Consider taking your profits and reinvesting elsewhere if there is no real long-term future value that you can gain from such an investment.
The Desired Outcome
Of course, the desired outcome of any trade is profiting from that exchange, but you must ask yourself: “How much is how much?” You must calculate the risks involved and consider the strategy you employ, including your motivations and reasons for taking profits and investing them.
Again, it all comes back to the individual or investor in question. Reaching the desired outcome may have some spark of luck involved, but most of it requires strategic planning and solid projections.
Conclusion
Whether you’re starting out in crypto investing or have dabbled into some of its nuances, always recognize the motivations behind your cryptocurrency investment strategy. It is only then can you truly optimize and maximize your profits with a clear sense of purpose and a solid foundation of plans and strategy.
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