Once you’ve accumulated some Ether (ETH), the native coin of the Ethereum blockchain, through buying the tokens or mining them, there will probably come a time when you’ll decide to sell.
You may sell your Ether through an exchange to cash out a previous purchase of ETH as an investment. You may wish to spend your ETH directly via a payment card, for example. Additionally, you may want to allocate some of your ETH to spend on transaction or gas fees for decentralized finance (DeFi) solutions. For instance, developers demand the gas fee in order to process transactions on the Ethereum network.
This handy guide will dive further into the various ways of selling Ether and touch on some trading strategies.
Related: How to buy Ethereum: A beginners guide to buying ETH
Selling Ether on centralized crypto exchanges
The process of selling Ether on a centralized crypto exchange works similarly to buying it. First, you need to choose an exchange hosting Ether trading that operates within your jurisdiction and set up an account with it. You will likely be required to provide varying amounts of personal information such as your date of birth, address and a government-issued photo ID.
Once you’re all set up, you will need to choose between selling your Ether for fiat currency (USD, EUR, JPY, etc.) or trading it for a different cryptocurrency.
Exchanges have specific wallets and addresses for your various crypto assets on the platform. Simply navigate the website in search of a “sell,” “deposit” or “deposit into exchange” button. Upon clicking on one of those buttons, you will find your wallets and their corresponding addresses. Some tokens are built on other blockchains, for example, the ERC-20 tokens are built on the Ethereum blockchain. Be sure to check the compatibility of the wallets you are using for any given transaction. Send the desired amount of Ether from your holdings — held in a self-hosted wallet, for example — to your Ethereum address on the exchange. The time required for the transfer to confirm may vary depending on chosen fees and the traffic on the Ethereum blockchain at the time.
Once your Ether is confirmed and arrives in your wallet on the exchange, you can set how much of it you’d like to sell and choose the currency you’d like to receive in return. On most centralized crypto exchanges, this can be achieved through a limit or market order.
A limit sell order posts the amount of a crypto asset you wish to sell at a specific price level. The order is then filled if the market reaches that price and if a buyer on the exchange picks up the order. In contrast, a market sell order sells your chosen amount of a given asset at the highest price (for which other limit orders already exist) on the trading exchange. The exchange rate is normally calculated automatically based on the current market rate, the size of the transaction, or other variables.
Once the trade is complete, the funds — no matter fiat or crypto — will appear in your account. If you opted to sell your Ether for any of the traditional currencies, you will then have an option to withdraw the funds into your bank account. It may, however, take multiple days for the money to appear in your bank account, depending on the type of transfer chosen.
Several payment cards facilitate spending ETH and make the process more direct than cashing out on a crypto exchange and spending that money. Some businesses also accept Ether as a form of payment, although direct crypto usage in everyday life is outside of the norm.
Alternatively, if you’d prefer to sell your ETH directly to another entity, there’s an option to sell in a peer-to-peer (P2P) fashion: in-person or online via a platform. Online crypto P2P platforms are essentially marketplaces where users can place and respond to offers. These platforms typically involve sellers posting certain crypto assets for sale and listing details such as their desired price and payment method.
Escrow features on such platforms generally help the process operate more smoothly with minimal risk. In the crypto industry, an escrow essentially locks up funds in a neutral location, typically via a smart contract, during a multi-party deal. The funds are then unlocked once obligations have been fulfilled by the involved parties with the assets paid out accordingly. An Ether holder may also wish to sell his or her ETH to a friend or family member in person.
Whatever the method, be sure to check and comply with local regulations. Additionally, it is essential to exercise caution when conducting financial transactions with others online or in person. Knowing your way around crypto wallets and platforms and how crypto transactions work is also vital for conducting in-person and online crypto transactions.
Peer-to-peer ETH selling is similar to P2P Bitcoin (BTC) selling. For more information, check out — How to sell Bitcoin: 5 ways to ‘cash out’ your cryptocurrency
Do I need to sell?
Selling your ETH lies at your own discretion barring any regulation that comes into play that may change the situation around the asset. You may have a specific price goal in mind at which you wish to sell your ETH for profit, or you may simply be fine with holding indefinitely and seeing what happens.
Some traders and investors utilize specific strategies for their crypto involvement and profit goals. Buy-and-hold investing essentially entails buying assets and holding them for a considerable period of time before offloading them. Essentially, all you need to do is purchase Ether coins, store them in a safe place, such as an Ethereum paper wallet, and decide when you wish to sell them.
Some folks, however, may struggle with being too active in the market, moving in and out of positions too often based on emotion that could void their initial buy-and-hold intentions. Moreover, prudent investors are aware that no investment is 100% secure from failing and therefore, they do not invest more money than they can afford to lose. Although ETH is a well-known and prominent asset running on its own blockchain, it is likely not immune to the threats of potentially negative regulations and competing blockchains, among others.
One crucial aspect of the buy-and-hold strategy is the eventual sale. Buy-and-holders have options in terms of exiting their positions. They may, for example, sell all their ETH at once or scale out of their positions at certain price points.
Long-term holdings do not generally capitalize on shorter-term price swings, though. Although it is usually more complex than a buy-and-hold strategy, trading may allow capitalizing on shorter-term price swings. Trading ETH involves buying and selling the asset more often in search of shorter-term profits. Certain trading strategies involve buying and selling ETH multiple times per day, known as intraday trading, capturing smaller moves within a larger price trend or range. Another strategy, often called swing trading, may involve buying ETH and holding it for days or weeks before selling, capturing a larger portion of a broader price move. Typically, such shorter-term traders do not aim to capture the entire price move in the same way trend traders do. Trading styles vary significantly from person to person. Buy-and-hold is a broader term that can generally mean holding an asset for any extended length of time, depending on the holder.
Primarily, however, make sure you only invest what you can afford to lose entirely. Even though ETH is a prominent crypto asset, it is not impossible for the asset to fail or to cause holders losses due to high price volatility. Additionally, given the changing landscape of crypto’s legal realm, it is essential to keep up to speed on any regulatory changes in your jurisdiction that may pertain to you, as well as file your taxes appropriately to your region.
Active trading is a strategy that involves a deeper immersion into the market and requires a lot more time, knowledge and experience than buy-and-hold. Active trading means regularly keeping up with price action and related industry happenings to not miss the profitable buy and sell opportunities. These opportunities can be based on a number of factors used individually or combined such as charting or news. Active traders also must use self-control and avoid acting on emotion or impulse. Additionally, significant knowledge is necessary to know when to enter and exit positions, and risk management is needed for consistently profitable trading over a long time horizon.
If you’re opting for active trading, you are essentially speculating on Ether’s price, which means you will need to monitor the market and price fluctuations daily, if not hourly, depending on your chosen strategy. Related news articles, announcements and opinions may also be helpful to read as an active trader, since those can influence asset prices. At its simplest, a crypto asset’s price is determined by supply and demand. News can make an asset more or less attractive to holders or potential buyers, impacting this dynamic and causing rise or fall in an asset’s price.
“Buy low, sell high” is a common adage in trading. It essentially entails buying an asset when its price is low and selling when its price is high, leading to a profit on the price difference. The major problem with this, however, is that low and high are relative and subjective. What is considered high for some, at some point, may not be regarded as such for others at a different time. Additionally, when an asset has fallen dramatically in price, what is stopping it from falling further even if its price is already considered low? This makes it difficult to know when to buy or sell because there is no standard “high” or “low” price for any asset. Therefore, analysis and market education can be helpful, giving traders benchmarks and price points of potential interest.
Charting can serve as an effective tool for traders, providing historical information that tracks when the price has previously reacted or held as support or resistance. Support is a price level on a chart that acts as a floor, giving price a place to stop and potentially reverse its downward movement. In contrast, resistance acts as a ceiling, stalling the price from going higher with the potential to send the price momentum back downward. Charting also lets traders see the overall price action of an asset over extended periods of time, with the ability to check an asset’s price in relation to its all-time price high.
Depending on a number of factors, you may wish to sell your Ether directly into a different crypto asset or into a stablecoin for holding in a self-hosted wallet rather than selling into a fiat currency. Stablecoins are crypto assets tied to the value of an underlying item of value, such as the United States dollar. Someone might sell their ETH into a different crypto asset as a trade for profit on that new asset, or they might sell their ETH into a stablecoin to hold offline and protect some of their portfolios against price volatility.
Decentralized exchanges (DEXs) serve as an alternate place for people who wish to sell Ether for other assets. DEXs exist as part of the DeFi niche of the crypto industry. DeFi solutions built on the Ethereum blockchain generally cost certain amounts of ETH when making transactions or completing trades, which are paid as fees to miners on the network. Speaking of DeFi, instead of selling their ETH, one might choose to use it as collateral to take out a loan or use it to support a different DeFi opportunity. A number of DeFi solutions allow ETH holders to send Ether to a smart contract as collateral and receive a different crypto asset in return as a loan. Given the prevalence of crypto price volatility, however, those using ETH as collateral generally must put up more ETH than the loan value they receive to account for significant price swings during the time of the loan.
Source: Coin Telegraph