So, you have some bitcoin or cryptocurrency in your wallet and you’re ready to sell off your digital assets for cash.
This is a common step in many people’s crypto investing journey. But it doesn’t matter if you’re cashing out your crypto for astronomical returns or to free up capital; you need to know what options you have so you cash out safely and don’t overpay on fees.
Thankfully, there are several secure ways to turn your crypto into cash if you need regular fiat fast.
Best Ways To Cash Out Your Crypto Or Bitcoin
Choosing how to cash out your crypto largely depends on where you’re currently holding it.
For example, if you’re currently holding cryptocurrencies like Bitcoin and Solana in your Coinbase wallet, your easiest option is to sell off your crypto from the exchange. Similarly, many crypto wallets like Ledger let you sell crypto for cash right from its wallet.
With that said, there are numerous ways to sell your Bitcoin and other popular cryptocurrencies for cash.
Use A Centralize Exchange
One of the easiest ways to convert crypto into cash is to sell it from an exchange.
Leading crypto exchanges like Coinbase and Gemini let you convert your cryptocurrency into cash. For example, on Coinbase, all you have to do is use the Buy/Sell tab, choose the asset you’re selling, and then select USD for the payment type.
Coinbase displays a quote price which includes any transaction fees. Once you confirm the trade, cash deposits in your Coinbase cash wallet. From there, you can withdraw the money to your linked bank account.
Centralized exchanges charge network fees and transaction fees, but if you’re already holding your crypto in an exchange’s wallet, this is the fastest way to cash out your crypto.
Peer-To-Peer Crypto Exchange
Another method for exchanging crypto for cash is to sell through decentralized, peer-to-peer (P2P) exchanges.
A P2P exchange provides a way for two people to swap assets at an agreed upon price. For example, you can swap your Bitcoin for cash with another buyer, or exchange your Bitcoin for Cardano if you find a buyer.
There are also several benefits to using a P2P exchange over centralized crypto exchanges like Coinbase.
For one, P2P exchanges typically charge lower trading fees. And, you can negotiate with buyers to get the best price possible for your crypto. Furthermore, many P2P networks are decentralized, meaning you don’t have to verify your identity to use the platform. And, you can transact in pretty much any kind of currency you want, provided you find the right buyer.
Several popular P2P cryptocurrency exchanges include:
If you want the best of both worlds, you can use exchanges like Binance and KuCoin that have their own P2P marketplaces as well as centralized trading.
Just note the downside to cashing out crypto with P2P trades is that it takes more time than selling through a centralized exchange. This is because you have to post your offer, find a buyer, and potentially negotiate before making a sale.
Sell From Your Wallet
If you’re currently holding your crypto in a hardware wallet, there’s a chance you can sell crypto directly from your wallet for fiat.
For example, popular hardware wallet Ledger lets you sell bitcoin for cash through Ledger Live. Ledger partners with Coinify to let you sell off your BTC for cash, and you complete the entire process through Ledger’s interface.
Similarly, hardware wallet Trezor has its own Trezor Suite that lets you swap or sell off crypto your hold for fiat.
Granted, most hardware wallets don’t support many cryptocurrency transactions, and options like Ledger just support selling bitcoin for cash at this time. But if you aren’t dealing with many altcoins, this option could suffice.
Money Transfer Apps
These days, popular money-transfer apps like Cash App and PayPal are getting in on the crypto action. So, if you hold digital currencies with these apps, you can also use them to sell off your crypto for money.
At this time, Cash App only supports buying and selling bitcoin. In contrast, PayPal supports four different cryptos:
But both platforms make it incredibly easy to cash out your crypto. You pay selling fees that depend on how much crypto you’re selling and network speeds, but both Cash App and PayPal display the transaction fees and final value of your sale before you confirm the sale.
Crypto Debit Cards
If you’d rather spend your crypto gradually than sell it off in a lump sum, you can always explore various crypto debit cards that are coming to the market.
For example, Crypto.com, a popular cryptocurrency exchange, has its own Crypto.com Visa Card. This prepaid card doesn’t charge annual fees and lets you top up your balance with fiat or various cryptocurrencies. And depending on how many CRO tokens you hold and stake, which is the platform’s native token, you can earn up to 8% cash back in CRO tokens.
The Crypto.com card also provides perks like free ATM withdrawals and cash back for spending at merchants like Amazon Prime, Netflix, and Shopify.
Coinbase also has its own debit Visa card that lets you spend your crypto to earn crypto cash-back rewards.
Bitcoin ATMs
If you live in a major city, there’s a decent chance you can find a Bitcoin ATM near you. And, some Bitcoin ATMs let you convert BTC from your wallet into cash. All you have to do is scan your wallet QR code and then enter the amount of BTC you’re selling and the ATM will display how much cash you can get.
However, not every Bitcoin ATM supports selling BTC for cash. And many also require verifying your identity or creating an account with the ATM company. In this sense, it’s not as seamless as just showing up to an ATM and cashing out your crypto in a matter of minutes.
Ultimately, using a Bitcoin ATM should probably be your last resort for converting BTC into cash. This is because options like centralized exchanges are much simpler, and using P2P crypto exchanges helps you save on fees.
What To Consider Before Cashing Out Your Crypto
Thankfully, there are plenty of options for crypto investors to cash out their coins if they need to. However, before you pull the trigger, there are several implications you should consider.
Tax Implications
When you realize gains or losses on your cryptocurrency holdings, you create a taxable event. And according to the IRS, you have to report the sale of virtual currencies or the use of virtual currencies to pay for goods and services on your tax return.
This shouldn’t scare you off from selling your crypto for cash. However, you need to have proper crypto bookkeeping in place. This is because you have to report any capital gains on your sale. And if you’re selling off your crypto at a loss, you can potentially use that loss to offset some other capital gains from alternative investments or investments like stocks and ETFs.
Crypto tax software is your best friend here. Software like TaxBit and ZenLedger do an excellent job at consolidating all of your crypto transactions for a given year and breaking down all of your taxable events. This software can even support NFT transactions, so it’s a comprehensive way to track and report all of your crypto and NFT activity.
Trading Fees
Another factor to consider when selling your crypto for money are potential trading fees.
Different exchanges and money-transfer apps charge various fees depending on the crypto you’re selling, network congestion, and how much you’re selling. If fees take a large chunk out of your crypto sale, sticking with P2P exchanges is the best way to lower selling fees.
Opportunity Cost
When you sell off your crypto, you’re locking in that exit price. This could be excellent news if you rode Dogecoin or Shiba Inu to the moon. However, every investing sale has an opportunity cost.
But unlike stocks or more traditional securities, selling off your crypto closes a lot more doors.
For example, there are many lucrative crypto savings accounts like Celsius and Hodlnaut that let you deposit your crypto to earn passive income. Depending on the crypto and rate, you can usually earn 5% to 15% APY or more on your crypto.
When you compare this interest rate to a regular high-yield savings account, you’re giving up a lot of passive income potential when you sell your crypto.
Similarly, people are using crypto to earn income through methods like staking. And, you can even take out crypto-backed loans with companies like Celsius and BlockFi, gaining access to capital where a traditional personal loan provider might turn you down.
The bottom line is that cryptocurrency is an exciting space with lots of opportunity. If you need cash, there’s nothing wrong with selling off your coins. But just consider the opportunity cost of any trade you make.
Final Thought
At the end of the day, buying, selling, and swapping cryptocurrency doesn’t have to be overly complicated. Between centralized exchanges like Coinbase, P2P exchanges, and other options, it’s fairly easy to sell off your crypto when you need to.
Just remember to consider every trade carefully. Additionally, make sure you do your due diligence and only go through trusted crypto exchanges.
If anyone ever asks for your private wallet key or for you to send crypto first in exchange for payment, it’s a scam. As long as you stick to legitimate crypto exchanges and money-transfer apps, you shouldn’t have any problems in selling off your bitcoin or any other crypto.
