Why and how to take profits, even during a bull run 🚀?
Pierre Papin
01/14/2025, 9:49 AM
The world of cryptocurrencies is full of exhilarating moments, like bull runs: prices skyrocket, your portfolio grows by 10/20/30...%, and the craze spreads throughout the community.
Yet, this euphoria hides a very real danger: the extreme volatility of the crypto market. After—and sometimes even during—each major upward phase, a correction often follows, sometimes brutal, sometimes insidious.
Taking profits during a significant rally is not just about securing your gains; it's a strategic move to consolidate your wealth and avoid significant losses in case of a market reversal.
However, this decision remains a challenge for many investors as it goes against the cognitive biases and mindset of even seasoned crypto investors.
In this article, we explain why taking profits is a sensible decision for any investor. We’ll also show you how to spot and plan the best time to act, as well as which strategies to use to optimize your decisions while minimizing risks.
Why take profits?
In the world of cryptocurrencies, a bull run for instance can create the impression that gains are infinite. Yet, this perception is often misleading. Look at the charts and trending projects from 2021 or 2017, and you’ll see that even the most solid assets like Ethereum or Bitcoin have experienced dramatic drops—often when least expected.
Worse still: many cryptos that were among the most popular a few years ago are no longer even in the picture. Think about this before continuing to allocate significant percentages to trendy altcoins, especially after they’ve already pumped.
You don’t believe me? Then take a look below at which cryptos were trending in 2017, and then check how many are still around today.
The top 20 of November 2017. Who still remembers the leaders of that time, such as NEO, IOTA, Hypercash, or Lisk?
Protecting your gains before corrections and reducing stress linked to volatility
Crypto markets are highly volatile. What rises quickly can fall just as sharply. Many investors have seen their theoretical profits disappear because they didn’t secure their gains in time.Taking part of your profits allows you to turn virtual gains into real ones.
Keep in mind that it is always psychologically easier to take profits during a rising or stable phase than when prices are falling rapidly.
Nothing is worse than being forced to sell at the wrong time. That’s why it’s important to plan ahead.
In summary, taking profits is, above all, a matter of risk management and mindset.
It’s a strategy that allows you to:
- secure your gains,
- reduce your exposure to stress,
- better take advantage of future opportunities by having liquid assets ready, rather than staying tied to a bag of altcoins that may never revisit their previous all-time highs (ATH).
Reinvesting in solid opportunities and Rebalancing your portfolio
We can agree on this: crypto is the future. We all believe in it, which is why you invested in the first place and are still here after all this time, despite the difficult periods.
Thanks to this belief, you’re now in a position of success and you’re asking yourself whether to take profits or not.
However, remember that trees don’t grow to the sky, and ask yourself this question: Do you want to be that investor who once tasted wealth but ended up losing everything and had to start again from scratch?
A crisis is always possible—perhaps even likely... When it happens, you can often pick up certain assets at bargain prices:
- Cryptos.
- Stocks or indices.
- Foreign currencies.
- Real estate.
- etc.
The only condition for this is to have cash available, ready to be used instantly when these "once-in-a-lifetime opportunities" arise (relying on credit is often less feasible during uncertain times).
Expanding Your Horizons
Always remember that there is more to life than watching your portfolio rise (and fall), and that many other projects are worth your time.
See your investments as a means to achieve fulfillment in life, not an end in themselves.
Set your personal life goals in advance and give yourself the chance to achieve them.
Here are a few concrete examples of personal projects:
- Secure yourself financially by generating savings and/or passive income in preparation for the next bear markets, depending on your personal expenses
- Career change: leave your job to pursue a passion.
- Invest in rental real estate.
- Become a business angel and investing in tomorrow's sectors, as you did with crypto.
- Buy a business, launch a bar or restaurant, take over a hotel—the ideas are endless.
- Enjoy life
- Finance your primary residence.
- Buy your dream vacation home.
- Satisfy your desire for travel and sporting projects
- Help your loved ones
When to take profits?
Knowing when to take profits is just as important as understanding why. Here are the main indicators to help you identify the right moment.
Take some time to think calmly and choose your own personal triggers.
Once you’ve determined them, create a table, write them down, or even discuss them with your partner or a trusted friend, asking them to remind you of your promise to yourself when these triggers (which you have chosen) occur.
To avoid making impulsive decisions, it’s crucial to define clear and rational criteria in advance. Below are some simple indicators and strategies you can use as benchmarks in your profit-taking process.
When You Have Reached Your Financial Goal
Set a target price or a percentage gain in advance that you want to achieve. Once you hit this goal, stick to your plan.
“When my portfolio reaches XXX k€, I’ll secure half of it”
During Generalized Euphoria
When everyone is talking crazy about crypto—from mainstream media to social networks, and even your hairdresser—it may signal that the market is nearing a peak. Remember the irrational hype around NFTs or metaverses four years ago!
On Technical Overbought Signals
For those addicted to TradingView, you can set up technical alert indicators such as:
- Reaching certain Fibonacci levels based on the previous cycle’s amplitude (1.618 and 2.618).
- The RSI (Relative Strength Index) or MACD showing if an asset is in an overbought zone, indicating a good time to reduce exposure.
- Deviations from the moving average and related indicators (Golden Cross, Death Cross) can also be helpful, though they sometimes lag significantly.
- Psychological price and market cap thresholds remain relevant (e.g., previous ATHs, BTC reaching $150,000, ETH hitting €10,000, etc.).
- Dominance metrics are also valuable. Toward the end of a cycle, altcoins tend to outperform BTC. Be cautious, though—when even the most obscure altcoin riding a trendy narrative pumps, it’s often a sign the bubble is nearing its peak.
Few simple strategies to determine in advance
“When BTC reaches $200k, I need to ensure that at least XXX% of my holdings are in stablecoins.”
“When the total MarketCap hits $5 or $10 trillion, I will secure XX% of my portfolio.”
“When BTC dominance drops to 50%, I will convert 25% of my altcoins back into BTC.”
Maintain a Critical Mindset and Consider Bearish Arguments
Just because you’re a firm believer in crypto doesn’t mean you should ignore the fact that this sector can sometimes be excessive, and that some rapid price surges may represent bubble phenomena. These bubbles will inevitably lead to deep retracements or even significant intermediate crashes.
Also, remember that many actors—whether malicious or not—can trigger chain reactions at any time (FTX, LUNA, MtGox, Celsius, to name just a few).
How to Take Profits?
Now that the idea of taking profits is established, make sure you know in advance how to proceed.
- How to access your cold wallets?
- Which platforms to use?
- Which safe-haven assets to turn to? (BTC, ETH, Stablecoins, etc.)
⚠️ Keep in mind that taking profits in fiat makes you liable for taxation, as explained in the article below:
Practice securing a symbolic percentage (1–5% of your portfolio, for example) into your safe-haven assets.
Firstly, this allows you to verify that your processes are effective, which could be invaluable if you ever need to act quickly (e.g., platform issues or vulnerabilities detected in your custodial wallets).
For instance, it can be quite stressful to realize that your hardware wallet, such as a Ledger, is broken or needs an update right when you urgently need to send funds to a platform for selling.
Additionally, this helps train your mindset to get comfortable with taking profits.
💡 Be prepared to adapt your plan and revise your goals based on real events. Remember, just because you’ve set a framework doesn’t mean it must be set in stone, especially if your risk profile changes.
If your risk tolerance decreases or your financial needs evolve, it’s wise to adjust your strategy and either take or postpone some of your gains.
The Pitfalls to Avoid for a Successful Cash Out
Don’t Forget the Macro!
Even if the crypto market is doing well, certain macroeconomic events can literally dry up the market in just a few weeks:
- Interest rate hikes by central banks
- Armed or trade conflicts between major powers
- Regulatory offensives
- ...
Don’t Underestimate the Likelihood of a Black Swan
One element often underestimated by crypto investors is the risk of a Black Swan event—an unforeseen event with significant impact that disrupts markets. By definition, Black Swan events are rare and unpredictable, and they can cause spectacular drops in prices, even during periods of market euphoria.
These events can be endogenous or exogenous to the crypto sector... Do you want any examples?
- The 2001 World Trade Center attacks caused a global panic in financial markets (global stock exchanges closed, long-lasting repercussions).
- The 2020 COVID-19 crisis caused a sharp decline in both traditional markets and crypto.
- Events like the collapse of the FTX platform or the Terra/LUNA protocol crash in 2022 triggered massive liquidation waves, ruining thousands of investors in a matter of hours and leading to aggressive regulatory policies in the years that followed.
Now, let’s get a bit scared by sharing some potential Black Swan ideas for 2025-26 😈:
- The assassination of Donald Trump (imagine how close this bull run may have been to being derailed…) leading to a civil war in the USA.
- An armed conflict between two nuclear powers.
- A vulnerability in the Bitcoin protocol or a "brute force" attack using a quantum computer.
- The discovery of S. NAKAMOTO’s identity / transfer of his million BTC.
- Microstrategy's bankruptcy.
- The collapse of a platform like Binance.
- A depeg of one of the two major stablecoins (USDT / USDC).
- The emergence of a AI hostile towards humanity 🤖, an alien attack 👽, or the awakening of Godzilla 🐉.
Sure, we have a lot of imagination, and taken individually, the chances of each of these events happening are low (especially the last line 😁).
But improbable doesn’t mean impossible! And over a long enough period, the probability that a Black Swan event (even if we don’t know which one) will occur approaches 100%.
So take 10 minutes to reflect on what could happen, and ask yourself if you want to be 100% invested in crypto (with a majority of altcoins) if any of these events were to occur.
Conclusion
Collective euphoria can push you to want to wait longer, hoping to reach an "absolute top". However, no one can predict the market peak. A well-thought-out strategy for taking profits helps avoid succumbing to FOMO or greed—two classic traps for investors.
Remember that gains accumulated over a year or more can be wiped out in just a few sessions, or even hours.
Not having a plan means risking enduring several years of a Bear Market.
Having a plan and not following it is the same as having no plan at all.
Ideally, it’s during the Bear Market that a good strategy should be put in place.
But even at the beginning or middle of a Bull Market, it’s never too late to set goals and rules…
And make sure to stick to them!
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