10 Solutions You Need to Know for Your Cryptocurrency Exit Strategy
You Need to Know how to Get Through the Next Bull Market
If you have read my previous articles on cryptocurrencies, I am looking for a big win in the next bull run. Who isn’t? I have invested for the past four years and already know what I plan to do with my winnings. I plan to reinvest it.
Yes, I plan to reinvest the money, not in cryptocurrencies but another investment. I think many people fall into this trap when they invest or win a big sum of money, they really don’t have a plan on what to do with their money. You always need a plan or an exit strategy when it comes to investing. It doesn’t matter if you won $10 or $1,000,000. The key is what will you do with your money?
I know a few people who invest in cryptocurrencies and I tell them the same thing. Have a plan when you decide to sell your cryptocurrencies. You may want to pay off some bills or buy something nice for yourself. The key is to have a plan for your winnings.
The key is not to go backward which is what happens when many lottery winners win the big jackpot. Many people who win millions end up broke. They win a big sum of money and don’t know how to handle it. Their family and friends they haven’t talked to you years will call up and ask for some money. Many times these lottery winners end up in debt and have to turn in all of the toys they bought to cover their debt. Don’t let that be you.
Don’t be Greedy
When the cryptocurrency market takes off, figure out when you’ll sell. Don’t be greedy and let your investment ride the wave only to see it fall, which it will. I understand you may be in this for the long run and love the cryptocurrency market. You may think a cryptocurrency will replace the fiat currency you hold. I wouldn’t count on it anytime soon. Let me tell you that your investment could easily disappear if you get too greedy.
With the way the cryptocurrency market is, it is not easy for your investment broker to pull your money out of your account since you are probably the only one who knows your user name and password. Your investment broker can’t save you when the cryptocurrency market takes off.
Yes, this can be a scary market. You have probably heard stories about people who threw away their old computer where their bitcoin was stored or they forgot the password to their account and can’t access it anymore.
Life Happens
Then you may have heard of the story of the cryptocurrency CEO who suddenly died and he died with the password for his companies’ cryptocurrency account. Gerald Cotten was the CEO of Canadian cryptocurrency and founder of QuadrigaCX. He died unexpectedly at the age of 30 due to Chron’s disease. Cotten died along with the password for $190 million in cryptocurrencies under his company’s management.
I am not saying the same can happen to you, but it could. You don’t know how long you’ll live and I doubt you have shared your password to your cryptocurrency account. Most cryptocurrency websites, investors, and even gurus tell you not to share your password and not to even store the information on your computer or hard drive where it could easily be hacked.
The Next Bull Run
So imagine, the cryptocurrency market reaches a new all-time high in 2020 or 2021. Bitcoin breaks the previous record it set in 2017 and surpasses $20,000 for one bitcoin. You decide to let your investment ride because you think the market can go even higher. Many so-called experts have predicted this and you believe them. You keep your investment where it is.
Then you get into a car accident and you end up in a coma. Your spouse finds your ledger wallet where you store your cryptocurrencies and thinks it's just another thumb drive and she tosses it. She has more concerns to worry about. Your cryptocurrency investment is gone.
A year later, you wake up from your coma and finally remember your cryptocurrency. You see Bitcoin has reached $40,000. You finally go home and look for your thumb drive.
You ask your spouse, “Where is my ledger wallet?”
Your spouse is confused and says, “Your what?”
“My ledger wallet that I had in my sock drawer. It looks like a little thumb drive,” you say.
“Oh. That thumb drive! I threw it away when I was trying to get some clothes for you. I had other things on my mind and really didn’t think you needed that stupid thumb drive.” You can’t believe what you just heard.
This most likely won’t happen but sometimes you have to think, what is the worst thing that could happen with your cryptocurrencies?
Too many people have seen their Bitcoin investment lost forever.
My Recommendations
If you don’t have a plan for your cryptocurrencies, here are 10 ideas I put together to get you started. I encourage you to take and apply these strategies to enjoy your investment.
1. Create an exit strategy for your cryptocurrency holdings. At what price will you sell your cryptocurrencies?
2. Don’t be greedy as you approach the next cryptocurrency bull market. Take your winnings.
3. Be prepared to pay your taxes since the taxman will want some of your winnings.
4. Talk to an accountant on how much you’ll have to pay and set this money aside until it comes time to pay your taxes.
5. Spend a little and if you decide to reinvest your cryptocurrencies again, then do that.
6. Don’t try to time the market and expect to quadruple your earnings. Take some of your gains as soon as you can. The cryptocurrency market moves very fast and can easily change course overnight when you least expect it.
7. Keep track of your cryptocurrencies and have a detailed plan on what you plan to do.
8. Have an idea where you’ll deposit your money for the short term such as a bank until you have a definite plan on where you’ll spend your earnings.
9. If you need to reinvest your money into a different asset class such as stocks or real estate, do your research now on some possible places you may want to reinvest your cryptocurrencies.
10. Make contacts with some SMEs, subject matter experts, who can help you invest or put your winnings in the right place.
When the cryptocurrency market takes off, everything will go by so fast. You’ll have little time to do research after the fact so use this time now to do that. Start forming your plan and connections today.
If you already have a plan, then great. If not, you have a little more time to think and plan what you’ll do.
Do you have a plan after the next cryptocurrency bull market?
Tom Handy is a top Investment and Bitcoin writer on Medium, and father of two kids. He retired from the Army and sits on several non-profit boards. Tom is the top Yelper in his community and a top Google Guide. You can find him on Twitter @tomhandy1 or email him at [email protected].
This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any significant financial decisions.
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