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Getting into crypto is one thing, but investors also need to consider how and when to get out; this is known as a crypto exit strategy. Exiting the crypto market, simply put, is about selling or liquidating crypto assets or transforming them into something not listed on the crypto market, i.e., fiat currency or a tangible asset such as gold. A crypto exit strategy can take many different forms and involves careful consideration by the proprietary entity or investor, including timing, tax implications, market liquidity, and security.
In this article, we take a look at some examples of crypto exit strategies used by investors and some examples of recent crypto market exits that have marked record outflows from the Bitcoin ETF market.
Examples of crypto exit strategies
There are an infinite number of crypto exit strategies, as each one depends on the personal or corporate objectives of the person or entity behind the investment. Some strategies focus on maximizing profits during a bull run, while others prioritize mitigating risk during market downturns. But, broadly speaking, there are a few general crypto exit strategy categories we should cover. Each one has strengths and weaknesses, and the best choice will depend entirely on the investor’s goals, risk tolerance, and market outlook.
First up is the profit-first exit strategy. This involves setting a price point at which to sell or convert one’s crypto holdings. For example, this might involve waiting until Bitcoin has doubled in price before selling a portion of or all assets. This strategy sets a clear intention and marks a clear goal for the investor, and assuming the market is rising, allows them to exit the market with profit before a severe downturn. Another strategy is a time-based crypto exit, in which, for example, an investor may set a timeframe of three years from the initial investment, at which point they sell their holdings regardless of market performance. This strategy can be a good option for investors with time-related investment goals.
Others might choose a gradual exit from the crypto market. With this strategy, investors sell portions of their holdings over time, depending or not, on market conditions. This helps minimize the risk of exiting at a disadvantageous price and balance the effects of market volatility. For example, if you initially invested $20,000 in a cryptocurrency, you might sell 25% of your holdings when the portfolio value reaches $40,000, another 35% when it hits $60,000, and so on. Another popular option is the “house money” strategy. This crypto exit strategy involves withdrawing the initial capital once the investment has grown substantially, meaning only the profits remain in play.
Some recent exits from the crypto market
Some of the most notable crypto market exits that have hit the headlines recently are outflows from Bitcoin ETF funds. On December 19, these ETFs recorded a record single-day net outflow of $680 million, ending a 15-day streak of positive inflows that had brought over $6.7 billion into the funds. This trend continued over the following days, with total outflows reaching nearly $1.2 billion over a three-day period. These outflows seemed to come after a drop in Bitcoin’s price, which dipped below $100,000 amidst an increasingly cautious stance among investors, who were reminded of the market’s volatility. Some analysts suggest it may demonstrate a profit-taking exit strategy in response to macroeconomic factors.
In early January 2025, BlackRock made headlines regarding record single-day outflow from its Bitcoin ETF, as investors withdrew $332.6 million from the iShares Bitcoin Trust (IBIT) on the 2nd of January. This marked the largest single-day outflow since the fund’s inception in January 2024 and the third consecutive trading day of outflows, totaling nearly $393 million for the week. These exits not only demonstrate the volatility of the crypto market but also the importance of solid crypto exit strategies that align with the profit- or time-based goals of the investor.
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