Crypto Bull run exit strategies: How to Exit crypto bull run?

The cryptocurrency market during a bull run is highly volatile and speculative. The speculative-volatile nature of the market in combination with fear of missing out (FOMO) and the lack of proper risk management especially if investors fail to adopt appropriate exit strategies.

Understanding when to exit during these times is crucial to avoid potential losses. A well-thought-out exit strategy helps investors lock in profits and manage risk effectively. This blog will explore why having an exit plan is important during a crypto bull run.

Key Takeaways

• Brief introduction on crypto bull run exit strategies.
• What are the 10 different crypto exit strategies?
• Factors that you must consider while selecting a crypto bull run exit strategy.

10 Different Types of Crypto Exit Strategies 

Planning a crypto exit strategy can be difficult for traders, especially in this highly volatile market and also during a bull run. But, if you can control the market’s timings, things become much easier and simpler. It helps you to decide on the best crypto exit strategies and deliver the highest possible returns through investments.

But, there are no fortune tellers in this industry or experts who are experienced enough to tell about the right time to exit and maximize on the crypto investment. But, with a well-defined list of strategies, we can help you make your exit from the crypto market as valuable as possible. Here are the 5 most popular crypto exit strategies, along with their pros.

1. Set Profit Targets

The take profit orders are much similar to the stop loss orders. Instead of cutting the losses, they lock your profits. These orders are executed automatically and sell a position when the price reaches a particular profit level. These orders can help traders secure a gain without waiting for any “perfect exit”.

ALSO READ: What Is The Rising Wedge Pattern In Crypto Trading? 

Pros

• Prevents greed-driven overtrading.
• Helps in achieving consistent profitability by focusing on predefined targets.

2. Trailing Stop Loss

A stop-loss order automatically closes a trade when the price of an asset reaches a specific level. As suggested by the name, stop loss orders are designed to limit potential losses in case the market moves against your positions. Stop-loss orders are an essential tool for your risk management.

Pros

• Provides a clear risk management plan.
• It reduces emotional investment by automating the exit process.

3. Partial Exit

This strategy does not involve selling all the assets at once. Sell a portion of your holdings during the bull run and retain some for potential future gains. 

Pros

• The traders balance themselves while securing gains and have a potential for future growth.

4. Time based Exit

Investors apply this strategy to sell their assets after a particular amount of time has passed. It helps eliminate emotional decisions, lock in profits, and manage risks efficiently. It is beneficial for traders seeking consistent returns while avoiding unnecessary losses. 

Pros

• It eliminates emotional decision making and ensures disciplined trading to lock in profits.

5. Sell in Phases

It is a methodical approach to exit crypto investments and allows the traders to liquidate their holdings over time. Instead of selling all the investments at once, this strategy allows traders to divide their portfolios into smaller portions and sell them at specific time intervals.

Pros

• Investors can secure profits while holding a portion of their assets for future profitability.
• The crypto market is volatile. Selling in phases reduces the risk of selling an asset at the market’s lowest or missing out on potential surges.

6. Rebalance Portfolio

Portfolio rebalancing is the process of adjusting the components of your portfolio to maintain the desired level of diversification and risk. It keeps your portfolio aligned with the target token allocation even when the price of a token fluctuates. It can be selling the higher-performing assets and purchasing some underperforming ones.

Pros

• Rebalancing helps in eliminating the risk while diversifying your portfolio.
• This strategy also helps to actively change the allocations based on market trends and performance.

7. Diversify Into Stablecoins

While stablecoins are not seen as growth assets, they can help diversify a crypto portfolio. It can help balance risk and offer a stable foundation amidst the volatility of crypto assets. 

Pros

• Holding a portion of the portfolio in stablecoins reduces the overall volatility of the portfolio.

8. Monitor Market Sentiment

Understanding the prevailing market conditions is essential for making investment decisions. By closely monitoring market indicators like social media sentiment analysis, investor surveys, and option markets can help traders gain insights into market dynamics and adjust the investment strategies accordingly. 

Pros

• It helps capitalize on emerging opportunities while eliminating the risks associated with changing market conditions.

9. Sell After Reaching All Time Highs

This crypto exit strategy involves selling your assets when it reaches an all time high. It ensures you capitalize on the peak market price and maximise profits. 

Pros

• It eliminates the risk of holding an asset through potential market corrections. This strategy helps in securing gains when the market is at their strongest.

10. Automated Exit Via Bots

Automated exit strategies using the bots helps in executing pre set sell orders based on the market conditions and price thresholds. Bots ensure timely exits even during volatile market conditions without needing constant monitoring.

Pros

• This strategy eliminates emotional decision-making and enables precise execution to maximize profits.

ALSO READ: What Is Crypto Algorithmic Trading? How Does It Work? 

Signs that the Bull Run is Ending

There are certain indications and signs that shows that the crypto bull run is ending or over. They are as follows. 

1. Sharp price Corrections

A sudden and sustained dip in the prices of the assets can indicate the end of a bullish trend.

2. Decreasing Trading Volume

Reduced buying activity often suggests weakening investor interest and a potential market slowdown.

3. Increased Fear in Sentiment

A shift from greed to fear in market sentiment, often measured by indices like Crypto Fear and Greed Index signals an impending momentum.

4. Profit Taking by Whales

Large scale sell offs by major holders can trigger a widespread panic selling and signal the end of a bull run.

ALSO READ: How Long Will The Current Crypto Bull Market Last? Insights & Expert Predictions

Importance of Timing your Exit

Timing your exit during the crypto bull run is important because it helps traders manage their investment capital and increase the portfolio’s performance. A good exit strategy can also help avoid losses and ensure that you make back your initial investment. You can follow the tips we mentioned above and exit from the crypto market during the bull run.

Common Mistakes to Avoid

Making mistakes while trading in cryptocurrency is quite common for traders. But, if you can follow others’ and learn from their mistakes, you can avoid them. Some of the common mistakes to avoid are as follows.

• Exiting early due to fear. It is a common mistake that is caused due to the highly volatile nature of the market. Rapid fluctuations of the market can lead to panic selling.
• Holding an asset for too long makes a trader overly optimistic for their asset’s future.
• Ignoring the fees while selling crypto is another mistake to avoid while determining the exit points.

Post-Exit: What to do with your Profits?

Exiting a crypto position successfully is only a half part of your journey. Managing the profits effectively is also crucial to building financial security. There are many things that you can do. Here are some of them.

1. Diversify your Investments

Avoid putting all your eggs in one basket. Allocate the profits into other asset classes like stocks, real estate, mutual funds and other commodities to spread the risk.

2. Create an Emergency Fund

Secure a part of your profit as a financial cushion. This fund can cover the unexpected expenses and offer you stability during the uncertain times.

3. Pay Off Debts

Use your profit to eliminate high interest debts like personal loans or credit cards. This reduces future liabilities and improves your financial health.

Conclusion

Exiting a crypto bull run requires a strategic approach that aligns perfectly with your risk tolerance and financial goals. By implementing perfect techniques like setting stop loss orders, profit targets or diversifying your portfolio, you can secure proper gains without making losses. As the market evolves, adaptability and preparation are your best tools for navigating the highs and lows of the crypto space.

Mudrex is one of the best platforms for trading cryptocurrencies. You can download the Mudrex App from the Google Play Store and keep yourself updated with the crypto world. Whether you are a beginner or a seasoned trader, Mudrex will completely guide you throughout your crypto trading journey.

FAQ

1.How to exit the crypto bull market?

There are different strategies that a trader can follow to exit the crypto bull market. We have mentioned 10 different strategies. You can follow any one of them depending on your requirements.

2.How do you know when to exit crypto?

Ideally, most of the traders plan their exit once they have made significant gains. But, there are taxes that are levied depending on how long you hold the assets.