Are you curious about the methods of cashing out Bitcoin? Coinminutes has compiled a thorough guide that covers various methods for cashing out Bitcoin, including using trustworthy online exchanges and participating in peer-to-peer transactions.
Key takeaways:
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How to Cash Out Bitcoin?
There are various ways for you to sell Bitcoin, ranging from reputable online exchanges to transactions through platforms. However, before cashing out, it is important to consider transaction fees, and taxes to ensure safety and optimize profits.
Selling Bitcoin Using Exchanges
If you’re looking to cash out your cryptocurrency or Bitcoin, one of the simplest methods is to use a centralized exchange. It offers a user-friendly interface with a “buy/sell” feature where you can select the cryptocurrency you want to sell and specify the amount.
Once you’ve initiated the transaction, your cryptocurrency will be swiftly converted into cash, which you can access from your cash balance. If you prefer, you can then transfer the money to your bank account.
Some of the well-regarded exchanges include Coinbase and Kraken. Fees at these exchanges for Bitcoin selling transactions will fluctuate around:
- Coinbase charges a flat 1.49% fee on all transactions.
- Kraken has a tiered fee structure depending on your trading volume over the last 30 days. The higher your trading volume, the lower your trading fees.
For example, if your trading volume is less than $50K in 30 days, you will pay a maker fee of 0.16% and a taker fee of 0.26%. If your trading volume exceeds 10 million USD in 30 days, you will only pay a trading fee of 0.10%
Selling Bitcoin Using P2P
You also have the option to sell your cryptocurrency directly to another person through various platforms. One popular method is using online peer-to-peer platforms that connect sellers with potential buyers. In some cases, you can arrange in-person transactions if necessary.
When using an online peer-to-peer platform, you can sell your cryptocurrency online in exchange. These transactions are typically facilitated by an exchange, such as Binance‘s peer-to-peer platform called Binance P2P. Once you agree on a trade, the platform holds your crypto in escrow. After verifying the transaction record in your payment account and confirming that you have received the payment from the buyer, Binance will release the crypto to the buyer on the platform. About transaction fees, Binance charges 0.1% for both Taker and Maker for regular user accounts.
Another well-known option is the online platform Paxful. On Paxful, sellers have the flexibility to set their rates and can choose from over 350 payment options, including cash, gift cards, and other digital currencies. According to the platform’s website, there are over 12 million users worldwide with whom you can directly sell your cryptocurrency. About the selling fees of Paxful, a fee of 1% of the amount being sent with a minimum of 1 USD.
Selling Bitcoin Using Bitcoin ATMs
Cashing out your Bitcoin can also be done through Bitcoin ATMs, which function similarly to traditional ATMs but allow you to convert your Bitcoin into cash instantly. Bitcoin ATMs operate differently from regular ATMs. To make a cash withdrawal and sell your Bitcoin at a Bitcoin ATM, the machine will provide you with a QR code. You need to send your Bitcoin to that QR code and then wait a few minutes to receive your cash.
It’s important to be aware that the commissions or fees associated with Bitcoin ATM transactions can be quite high, in the range of 10% to 23%. Therefore, it’s crucial to consider the amount you’re being charged and whether it’s worth exploring alternative methods for cashing out your Bitcoin.
Selling Bitcoin Through Brokers
If you have your crypto coins held by a broker, the simplest option is to stick with that broker. For instance, if you’re a client of Robinhood or Webull, both of which offer extensive crypto trading, it would be easiest for you to execute a trade on their platform.
Once the trade is completed, the cash will be available in your account, and you’ll be ready to make further trades.
Since the introduction of spot Bitcoin ETFs in 2024, investors now have a straightforward way to buy and sell Bitcoin using a familiar structure. ETFs (Exchange-Traded Funds) are traded on exchanges and can be accessed through most brokers. The expense ratios on several Bitcoin ETFs are lower than what you might have to pay for trading on a crypto exchange. This provides a convenient and cost-effective option for investors interested in Bitcoin.
Considering Factors When Cashing Out Bitcoin
Fees
Fees for selling Bitcoin depend on the payment method and platform/venue used. For example, if you’re selling directly to a friend and settling in cash, you’ll only need to consider the ‘network fee’ for sending the Bitcoin from your digital wallet to your friend’s digital wallet. If you’re receiving cash via bank transfer, you’ll of course need to factor in the associated fees. Exchange services also charge fees for facilitating trades. These fees cover the exchanges’ operating costs plus a small margin.
Taxes
When you exchange your Bitcoin for regular money, it’s important to consider Bitcoin taxes. If you sell Bitcoin that you have held for less than one year and make a profit, you will be taxed at your regular tax rate. The specific rate for the 2024 tax year can range from 0% to 37%, depending on your income.
If you sell a significant amount of Bitcoin without setting aside sufficient funds, you may not have enough money to cover your tax responsibilities. That’s why it’s crucial to always think about the tax consequences and ensure you reserve enough funds to fulfill your tax obligations.
How to Cash Out Bitcoin Safely?
Knowing about Market Conditions
It’s important to stay informed about the current market conditions and trends of Bitcoin. You can achieve this by reading articles, following social media accounts of cryptocurrency experts, and using analytical tools to track price fluctuations of Bitcoin such as CoinMarketCap, TradingView, and Cryptocurrency Alerting. Understanding the current state of the Bitcoin market helps you make informed decisions about whether to sell or continue holding Bitcoin.
Additionally, it’s crucial to grasp the factors that can influence the price of Bitcoin. These factors include government regulations, the extent of adoption by businesses and individuals, and the impact of media coverage. Understanding these factors helps you mitigate risks when selling Bitcoin and avoid panic selling when the price is declining.
Selecting The Strategy Based on Your Demands
The best way to sell your Bitcoin depends on your specific needs and preferences. Consider if you want to sell quickly or if you’re willing to wait for a better price. Think about whether you’re selling a large or small amount of Bitcoin. These factors will help you choose the most suitable selling method.
It’s also important to take into account the available payment methods. Some selling platforms only accept specific payment methods, such as bank transfers or credit cards. Make sure to select a selling method that supports your preferred payment method.
Considering the Risks of Selling Method
Each selling method comes with its own set of risks. Below, Coinminutes will suggest some risks and solutions for each method of selling Bitcoin
Cryptocurrency exchanges
With this method, users may face the risk of frozen or seized funds due to regulatory changes. Moreover, users verify identities, exposing them to data breaches.
How to avoid: Choose an established exchange with a good reputation and a history of complying with regulations. Use strong passwords and enable two-factor authentication (2FA) on your exchange account.
Peer-to-peer (P2P)
When using methods to cash out Bitcoin, there’s a higher chance of encountering scams or fraud since there’s no intermediary involved.
How to avoid: Only trade with users who have a good reputation on the P2P platform. Crucially, never share your private key with anyone.
Bitcoin ATMs
This option typically has high fees and may not be widely available in your area.
How to avoid: Compare fees between different Bitcoin ATMs before using one. Additionally, check websites that list Bitcoin ATM locations to see if there are any in your area.
Selling through brokers
You may be dealing with unknown parties, and there’s a chance of theft or fraud if you choose this method.
How to avoid: Use a reputable broker who is licensed and regulated. Look for reviews from other users and make sure the broker has a good track record.
Checking the Selling Platform’s Validity
Before choosing a selling platform or service provider, it’s crucial to verify their legitimacy. Look for reviews and feedback from other users to gauge their reputation. Also, check if the platform or service provider has a history of fraud or scams.
It’s important to ensure that the selling platform or service provider is licensed and regulated by relevant authorities. This provides an extra layer of security and ensures that your transaction is both safe and legal.
By selecting the right selling method, you can sell your Bitcoin efficiently and securely. Consider your needs and preferences, weigh the pros and cons of different selling methods, understand the associated risks, and verify the legitimacy of the selling platform or service provider. Keeping these factors in mind, you can make an informed decision and maximize the value of your investment.
The Bottom Line
CoinMinutes has provided you with information on various methods for how to cash out your Bitcoin. Each method has its pros and cons. It’s important to choose a form that aligns with your preferences and needs. Remember to keep the Bitcoin selling tips in mind to ensure a safe and reliable transaction.
