Is there a good reason to ever sell? Probably not

One of the most heard reasons to sell is the expectation of the price going lower. Seems reasonable. And even though no one can predict the markets, one might have a good reason to expect the price to go down. But even in that case, there is probably a smarter move than selling your coins: you could sell the future and cash in an extra 10-20% profit. Or what about the case of needing cash/money right now? Is that a good reason to sell? Not likely, you could just as well take out a loan against your bitcoin to keep exposure. This is especially interesting from a tax burden perspective. In the following flow diagram we help you decide whether it is ever a smart move to sell your coins.

Should you sell your bitcoin?

flowchart bitcoin

Never selling?

As one can see it is only a smart decision to sell if you need cash right now and you think the price will go lower. On top of that, you do need to check your tax rules. For most Americans for example it might still not be a smart move to sell (taxable event), when you could just as well take out a loan against your bitcoin and avoid the tax burden. This does depend however on the tax percentage and with how much you think bitcoin will decrease in price.

In the other cases mentioned you are likely better of selling futures, trading options or taking out a loan.