Four easy ways to cash out your Bitcoin and other crypto

Many have made millions off Bitcoin (BTC) since its 2009 launch, but before enjoying those gains, investors may need to convert their crypto into fiat currency. 

While the process may seem straightforward, cashing out crypto can quickly get complicated – it involves understanding potential risks, fees, and tax implications while staying updated on fluctuating market conditions and evolving regulations. Choosing the right approach can make all the difference, as transaction times, fees, and potential profit can vary greatly depending on your exit strategy.

In this guide, we’ll explain how to cash out Bitcoin and other digital assets and offer tips to help ensure a smooth, secure, and lucrative process.

Factors to consider when cashing out crypto

When cashing out crypto, the goal is generally to maximize profits. But it’s not as simple as spontaneously hitting a “sell” button. There are several key factors to keep in mind:

Transaction fees

Exchanges and other platforms charge fees, either as a flat rate or a percentage of the total withdrawal. Network fees (gas fees) also apply and can fluctuate based on how busy the network is at any given time. 

One way to reduce transaction fees is by lowering the transaction’s priority. Most digital wallets allow you to manually set a lower fee, typically labeled as “low priority” or “economy,” which tells the network your transaction isn’t urgent. This saves on fees but results in longer confirmation times, as miners prioritize transactions with higher fees. It’s a useful option if you don’t need the funds immediately and want to minimize costs.

Time and effort 

Cashing out crypto doesn’t happen instantly. If you use a centralized exchange (CEX), you’ll need to complete know-your-customer (KYC) verification, which can take time. Alternatively, peer-to-peer (P2P) trades let you skip the KYC process, but they carry more risk and may take longer to complete securely. 

Taxes

In the United States, the Internal Revenue Service treats crypto as property, meaning many transactions – including selling, trading, or using it for purchases – are taxable events. You pay capital gains tax on any profits, while losses can be written off. To streamline tax reporting, it’s important to keep detailed records of every transaction. Using crypto tax-reporting software like CoinTracker can simplify the process, helping you track your trades, calculate capital gains, and ensure full compliance with tax regulations.

Market conditions

Crypto trades 24/7, which means market conditions are constantly changing. Many investors try to time their cash-outs to maximize profits and minimize fees. By monitoring key market indicators like moving averages and trading volume, you'll be better equipped to anticipate trends and make informed trading decisions. For instance, if Bitcoin's price is rising, you might wait to cash out for a better return. Conversely, if you expect a drop, you could sell sooner to lock in your profits. Setting stop-loss or limit orders can also help automate these decisions, giving you more control over your trades.

Financial goals

Before converting crypto into fiat, it's essential to align your actions with your financial goals. Some investors prefer reinvesting their earnings into other assets like stocks, bonds, or even alternative cryptocurrencies, while others choose to hold onto cash for more liquidity. Establishing a clear strategy for your profits helps optimize returns, especially since traditional savings accounts typically offer lower yields and may not keep pace with inflation. Diversifying into different investments helps reduce risk and increase your potential for long-term growth.

Four ways to cash out crypto

How you cash out your digital assets can affect both the price you get and the fees you pay. Some methods are more cost-effective, while others prioritize convenience. Deciding which route is best depends on your needs and comfort level. Here are four ways to convert your crypto into cash:

1. Withdraw crypto to a bank account

Selling crypto on exchanges like Coinbase or Kraken is one of the most common ways to cash out. You'll usually withdraw to your bank account via ACH transfer, which is low-cost but can take a few days.

2. Cash out with a debit card

Some platforms offer crypto debit cards that allow you to spend Bitcoin directly or withdraw cash at an ATM. For example, Binance and Crypto.com offer crypto debit cards with relatively low transaction fees. Just be prepared to go through additional KYC steps when signing up.

3. P2P trades

Crypto's P2P nature allows traders to deal directly with one another, which can offer better pricing. Platforms like OKX match buyers and sellers, letting them arrange trades without intermediaries. But remember – there’s less oversight, so it’s important to be cautious of potential fraud.

4. Bitcoin ATMs

Bitcoin ATMs are a convenient way to cash out quickly, offering direct exchanges between Bitcoin and fiat currency. More than 35,000 Bitcoin ATMs exist globally (at the time of writing), and the process is similar to using a traditional ATM. That said, fees can be high (5–15%), and KYC verification is typically required. You'll also need a crypto wallet that's compatible with the ATM.

Stay organized and stress-free with CoinTracker

Cryptocurrency may be complicated, but paying taxes on your gains shouldn’t be.

CoinTracker makes crypto portfolio tracking and taxes easy. By integrating with over 500 crypto wallets and exchanges, CoinTracker can analyze your trades and optimize your tax report in minutes. 

With automated DeFi detection and bulletproof security, CoinTracker enables you to make every trade with confidence. Start for free, and discover why millions of traders trust CoinTracker to maximize their returns. 

Disclaimer: This post is informational only and is not intended as tax advice. For tax advice, please consult a tax professional.