When to Take Profits in a Crypto Bull Market on Bankless (2024)

The thrill of the crypto bull market can be exhilarating.

Prices soar.

Your portfolio hits new all-time highs each day.

However, the key to truly capitalizing on these moments lies not just in buying wisely but in selling wisely.

Most people focus heavily on entry points, but it's the exit strategy that often determines whether you leave the bull in a state of success or not. In our volatile industry, mastering the art of taking profits proves the most important skill.

The below tips are pretty established at this point, but responsible growth is hard to keep in mind when memecoins are ripping all around you! So, think of this as a well-timed refresher.

1. Set Clear Profit Targets:

Know when to get out by setting clear targets.

For example, you can sell 10% of a holding for every 50% price increase. If you buy WIF at $2, your first sell point would be $3, then $4.50, and so forth. Having predefined targets helps eliminate emotional decisions, allowing you to lock in profits systematically.

2. Implement Stop-Loss Orders to Limit Losses:

Let the market tell you when it's time to draw down your exposure.

Setting percentage decreases at which you exit a position if the price falls to a certain level, such as 25% below your purchase price, can protect your portfolio. This strategy will help you preserve capital and avoid larger losses in a downturn.

3. Monitor the Market for Key Signals:

Keep your eyes peeled for top signals.

We wrote a guide on top signals to watch for. Know that top signals may change from cycle to cycle as crypto continues to gain adoption, especially with the record-breaking adoption of the ETFs. Twitter has already turned to examining what events might mark new tops.

Embracing a combination of classic and updated top signals will be your best approach to knowing when the bull stops.

4. Regularly Reassess Your Strategy:

Embracing flexibility in your strategy is essential in crypto.

As we all know, the crypto market changes rapidly. Initially, you may take profits on an altcoin at 30% gains but decide to adjust this to 20% after assessing the coin's volatility and market conditions.

Regular reassessment like this is good. It keeps your strategy aligned with the current market environment and eliminates having blind faith.

5. Sell in Phases After All-Time Highs:

If you're wary to sell a coin on its run-up to its former glory, reassess once its reaches ATHs.

After reaching a new all-time high, implement a phased selling strategy, like selling a percentage of your holdings each month. This method allows you to secure profits while still benefiting from further increases.

6. Document Your Strategy and Stick to It:

Detail and document your investment thesis, entry points, profit targets, stop-loss levels, and reassessment conditions for each cryptocurrency.

A written plan fosters discipline, helping you stick to your strategy even in turbulent market conditions. Nothing proves better than conviction.

A well-defined selling strategy proves critical to maneuvering the world of crypto, arguably even more than a well-defined buying strategy.

By setting clear profit targets, employing tiered selling, managing risks with stop-loss orders, and staying attuned to market signals, you position yourself to capture gains and protect your investments. Remember, the most profitable investors are those who plan their exits as carefully as their entries. Embrace the discipline of profit-taking and you’ll navigate the complexities of the bull market with confidence.