There are no firm rules on when you shouldn’t sell crypto. The most important thing to remember here is that you shouldn’t panic-sell because the price has dropped. If you still think it has long-term value, hang on to it.
Panic-selling is a decision that many crypto investors later regret. They buy when a cryptocurrency is at a high, sell when the price plummets, and then miss out if the price bounces back.
If the price has dropped and you no longer think the cryptocurrency is a good investment, then you should sell. However, a price drop should never be the only reason you sell.
Things to consider before selling crypto
Here are the most important things to consider before selling crypto:
How much will you sell? You don’t need to sell everything, especially if it has increased in value. You could sell a portion of your holdings to rebalance your portfolio and hang on to the rest if you still think the cryptocurrency will be a winner going forward.
What are the tax implications? If the cryptocurrency has increased in value, you’ll owe crypto taxes. It’s taxed as long-term gains if you held the crypto for more than 365 days.
Long-term capital gains have lower tax rates than short-term gains, which are taxed as ordinary income. If you’re close to the year mark, consider waiting to sell your crypto until after it passes that long-term gains threshold.