Top 4 Crypto Exit Strategies for 2024

Top 4 Crypto Exit Strategies for 2024

Top 4 Crypto Exit Strategies for 2024

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With the crypto markets heating up, investors are entering the industry to benefit from the incredible upside opportunity. The high volatility of cryptocurrencies allows them to provide market participants with huge potential gains.

However, although crypto assets can experience staggering growth, their price can also crash almost instantly. Consequently, this high volatility makes them lucrative, albeit very risky. For this reason, any crypto investor worth their salt should have a solid exit strategy.

Taking profits in a bull market can be extremely tricky, you might be tempted to hold on to your assets for increased gains. That said, this could also result in you riding your profits to the top and back into losses if you aren’t careful enough.

For this reason, this article will outline four sound strategies for taking profits in a bull market. Following a plan that uses one of these techniques should give you the right moment to convert BTC to USD and make significant profits.

Top 4 Crypto Exit Strategies for 2024

1. Trend Break Exit

The trend break exit method is the first one on our list that will allow you to boost profit when trading. This strategy requires some understanding of technical analysis as it takes into account the 21-week exponential moving average (EMA) indicator.

In contrast to the traditional simple moving average, the EMA places more importance on most current data points. As such, it reacts much quicker to price changes and will provide a better indicator for price shifts.

Trend Break Exit

Consequently, it serves best to identify price trends and trend breakouts. Trader tools like Tradingview and spot exchanges will allow you to set up your own EMA method on the chart.

One of the most common usages of EMA is by setting your chart to show the 8-week and 21-week EMAs. The 8-week EMA will serve as an indicator of trend breaks. When the 21EMA crosses above the 8EMA, this indicates that the market trend has turned bullish, which means a buy signal.

When the 21EMA crosses under the 8EMA, the market indicates a bearish trend break and a sell signal.

2. Exit by Cycle

Every market cycle is usually divided into four different stages, such as accumulation, markup, distribution, and markdown.

  • Accumulation: This initial stage of the market cycle usually depicts a sideways price movement, with reduced volumes. The price is usually contained between clear resistance and support levels. As its name would suggest, this period is when you would want to start accumulating crypto assets. In this stage, the price action doesn’t provide too much upside for retail investors but can serve as a good market entry point.
  • Markup: The second stage of a market cycle is when price action breaks out of its initial resistance levels. If the price starts registering higher lows with increased volume, for instance, this means that a trend is setting in. In this stage, you can exit to take profits.
  • Distribution: The distribution stage signals that early and current buyers might be setting up exit points. This phase of the market cycle usually shows stagnating prices with increasingly high volumes. It’s the best moment to start taking profits and exiting riskier positions.
  • Markdown: Finally, the last stage of the cycle is when the price plummets and everyone tries to exit their positions, even at a loss. Once the price reaches support levels and starts trading sideways again, we go back to stage 1—accumulation.

Understanding the phases of the market is incredibly important if you wish to be successful and make profits. For instance, you can even profit during markdown periods by shorting certain assets, if you can detect the cycle.

3. Price Target Exit

The price target exit is a much easier strategy to implement as it doesn’t involve advanced technical analysis. Instead, it relies on fundamental analysis and project valuation.

This means that you should do a fundamental analysis of the project — research the value it provides, compare it to the competition, etc. Furthermore, try to assess the hype around the project and whether it still has some pull in the industry. Finally, analyze the total supply of the asset, the current market cap valuation of the project, and previous price ceilings.

Price Target Exit

This should give you a ballpark idea of the maximum price level this asset should reach during a bull market. Setting this target price lower than your estimate will make it easier to avoid risking missing out on the top.

4. Time Target Exit

The time target exit involves timing the market by relying on the longevity of the cycle following the Bitcoin halving. Every four years, the BTC algorithm cuts the block rewards by half, usually signaling an upside market cycle following this event.

Since this event occurs every four years, we can draw some conclusions on the timeline of the bullish cycle. Usually, it’s a good rule of thumb to start taking profits on your positions 540 days after the halving.

The next halving event will occur in April 2024, which means that the bull market should reach its peak by October-December 2025. Since this method has its flaws, the best is to combine it with some of the other exit strategies in this article.

Conclusion

Taking profits in the crypto market is a challenging endeavor, considering the high volatility of these assets. Having a predetermined exit plan will allow you to exit with some profits. Combining the strategies depicted in this article should give you the edge and allow you to make the best out of the ongoing bull market.

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Christy Bella
Christy Bella
Blogger by Passion | Contributor to many Business and Marketing Blogs in the United Kingdom | Fascinated with SEO and digital marketing and latest tech innovations |