Crypto Exit Strategy — A Quick Guide (January 2025 Update)

When and Ways to Take Profits

If past crypto cycles were to give us an idea of market peaks, the latter half of this year (likely around September) would be the time to take some money and run. 
 
There are different ways to take crypto profits. The most popular ones include: 
 
— Converting crypto profits into fiat (USD, EUR, GBP, etc.);
 
— Converting from altcoins — particularly small to mid-cap ones — into Bitcoin and/or Ethereum, and ultimately converting into fiat or stablecoins, 
 
— Going from cryptocurrencies to stablecoins, remaining in the market and having cash readily available to buy back in when there are abrupt and sharp dips.
 
— A combination of these, to varying degrees.

I recommend the last point but increase the profit from fiat and stablecoins. When the market has been euphoric for a few months, a significant dump is (often) imminent.
 
 It is pointless to throw in too many numbers here, as everyone’s financial situation and risk tolerance vary considerably. 
 
 From my experience, don’t underestimate massive 24 to 48-hour drops across the entire space; these things catch noobs off guard, myself included when I started. 

My exit strategy

For brevity, I will divide this info into four sections: 
 
— Bitcoin (BTC) and Ethereum (ETH)
— Mid to major altcoins (ranked 3–30, based on market cap)
— Small to mid-cap alts (31–150*)
— Micro and other small caps (<150)
 
Considerations and assumptions
 
— Adjust figures accordingly to match your circumstances and what’s right for you; 
— Price points (or multipliers -> 2x, 5x, 10x, etc.) provided hereafter are NO guarantee that these will be reached, even when accounting for all-time highs;
— For simplicity, I’ve rounded figures. 
— I have also avoided staking rewards and (fiat) inflation. Do factor this in when dealing with longer timeframes and using your local currency;
— In most cases, I will use $1,000 for each category as the upfront investment unless specified otherwise. 
 
Let’s begin. 

BTC and ETH

 
$1,000 into BTC and $1,500 into ETH. These are currently $98K and $3,600, respectively.
 
— 15% when each has done a 1.5x; 
— 15% (of what’s remaining) after a 3x from present-day prices (~$290K and ~$11K), 
— 25% after a 5x 
 
Two options from here: 
 
— Take 35–40% after roughly 8x, or
— Hold and ride out any new bear markets, waiting for a following bull market. 

That’s up to you. 
 
At 15x (sounds ridiculous, I know, but don’t rule it out), withdraw about 70% of what’s remaining. For context, 20x would represent $1.47 million per BTC and around $54K per ETH. 
 
For context, where BTC is beyond $250K (even $160K as a conservative estimate), this will most likely occur in future cycles, not this one. 

Mid-sized to major alts (3–30 ranking) 

 
— Take 15% after a 3x -> $1000 x 3 = $3,000, minus 15% is $3000 x 0.85 = $2,550 remaining
— 25% after another 4x -> $2,550 x 4 = $10,200, minus 25% is $10,200 x 0.75= $7,650
— 35% after the next 4x -> $7,560 x 4 = $30,600, minus 35% is $30,600 x 0.65= $19,890
 
— (For cryptos ranked 3–10) I would take more profits at around 12x (i.e., 3x, take profit, then 4x), possibly sooner. 

Small to mid-cap alts (31–150)

As we go into the altcoins with less than a $1B market cap, consider taking more profits by converting some into BTC, ETH, or a few major alts.
 
— Take 10% after a 5x 
— 15% after 10x 
— 30% after 20x
— 40% after 50x (take 60% after 50x for altcoins ranked 31–60)
— 80% after 80x (90% after 50x for altcoins ranked 31–60) 

Micro and other small caps (>150)

This is my favourite category (albeit the riskiest), as it offers the most potential for life-changing profits, which can be converted to boost BTC and ETH holdings.

— Take 10% after a 10x = You’d have already broken even.
— 15% after 20x 
— 35% after 40x
— 50% after 60x 
— 80% after 100x 
 
95% after a 150x…come on, don’t tell me you won’t be happy with this ROI. Take the profits and GTFO. 

Additional thoughts

I could have assigned Ethereum to the second category, had Bitcoin by itself, and created additional categories, but it would have started getting too repetitive. 
 
After all, as mentioned in the title, this is a brief guide, not a 3,000-word comprehensive guide into over a dozen crypto assets.
 
Use the figures I’ve listed here as a guideline to assist you/as a starting point, not something to follow by the book. 
 
If your investment in cryptocurrencies is a much higher percentage of your net worth than the figure that’s usually recommended — up to 5% — you should consider taking more profit.
 
As a reminder, you should avoid having all your crypto assets in one place. This applies to custodial wallets (exchanges) and non-custodial storage (e.g., desktop, mobile, and hardware wallets). 
 
Why? Besides the risk of losing your device and recovery seed for self-custody, there’s the risk of exchanges going down due to an influx of users logging in simultaneously or, worse, being able to lock you out of your account without explanation. 

Imagine being unable to access your funds when you decide it’s the best time to take profits. 
 
Fortunately, with hardware wallets, improved UX/UI for DEXes, and various stablecoins available across different chains, there’s a P2P Plan B in case centralised exchanges (CEXes) try to play games or don’t have their act together to cope with a surge of logins amid the most intense periods of a bull run.
 
Even though most CEXes can handle a larger influx of user logins than in past years, prepare for the worst.

— Don’t let others tell you when to cash out; create a well-thought-out exit strategy that works for you, stick to it, and move on. 
 
— There’s no use constantly dwelling on something once the event’s passed. Yes, many of us do this, and I’ve been guilty. Use what you’ve learned from experience to be better equipped for the following cycle (let alone anything in life), as there will be plenty of bull and bear cycles along the way.
 
 There is another way to take crypto profits, and it is also the most unorthodox: converting from crypto to physical commodities, notably precious metals. This can also be done on-chain via tokenisation platforms or even when converting to Tether Gold (XAUT). 
 
 Before wrapping up, you might wonder why I am talking about an exit strategy now, even though renowned Bitcoin investor and Fundstrat Global co-founder Tom Lee expects BTC will hit $250,000 in 2025. 

We’re already in a bull market and could be closer to the end than the beginning. I believe we’re approaching the middle of it. 
 
As a result, you should start analysing your situation and devising your exit strategy. 
 
Moreover, by the time you’re reading this (for those reading months down the track), we could be just weeks or days away from a major market crash. I prefer to share my thoughts sooner than later.
 
— When the bull market eventually concludes, it’s wise to have some dry powder available (e.g., stablecoins or fiat) to take advantage of abrupt dips, as we witnessed in December 2017/January 2018 and late 2021. 
 
Cash reserves will help snap up crypto at a relative bargain in preparation for the next cycle. 
 
Mind you, considering the overwhelming institutional interest (and the incoming US Federal Government’s enthusiasm for a strategic Bitcoin reserve), I question how much BTC will dip moving forward. 
 
There will be pullbacks, but don’t rely on it tanking in price as it did in previous cycles.
 
— I rarely offer timeframes when Bitcoin or alts could hit 5x, 10x, etc., as it’s all guesswork, and no one knows. 

P.S. Happy 16th birthday to Bitcoin! 

Disclaimers

• N.B. None of this is financial advice; I am not a financial advisor. This information is for educational purposes only. You are ultimately responsible for crypto investments, let alone in any asset class.

• The opinions expressed within this piece are my own and might not reflect those behind any news outlet, person, organisation, or otherwise listed here.

• Please do sufficient research before investing in any crypto assets, staking, NFTs or other products affiliated with this space.

• Bitcoin (BTC) and Ethereum account for about half of my crypto holdings, followed by Cardano (ADA) and XRP, which represents another 25%. 

Featured image acknowledgements

The background was made with Pikaso, an AI-generation tool by Freepik.
 
 Brand assets provided are from the following sources:
 
 BTC — https://pixabay.com/vectors/bitcoin-logo-currency-money-cash-225079/
 ETH — https://ethereum.org/en/assets/
 XRP — Image by Tukunen at Shutterstock

Originally published at https://www.cryptowithlorenzo.com