People who made a fortune from cryptocurrency and those who lost big on it have one thing in common: they needed to sell at just the right moment. For those who made the right choice at the right time, they saw their investments multiply exponentially. But those who held on to their coins when they should have cashed out faced serious financial losses.
And while learning how to time your trades takes practice, you can easily learn how to get the money from your crypto off your hot wallet and into your pockets. So, it’s time to prepare yourself for when Bitcoin hits another $68,789 per token (or higher!) Read on to learn how to withdraw Bitcoins to your bank account.
Is Bitcoin Real Money?
Bitcoin is a decentralized digital currency, without a central bank or single administrator. You can send it from user to user on a peer-to-peer network with no intermediaries. Transactions are verified and recorded in a publicly distributed ledger called a blockchain.
Calling Bitcoin “real money” isn’t completely right, but neither is it completely wrong. It’s not fake money like Monopoly cash; it’s actual, priced US dollars that you can use to buy goods and services.
However, Bitcoin’s value is not determined by the US dollar. It’s determined by the market, which fluctuates based on supply and demand. So while you could use Bitcoin to buy a sandwich today, that same sandwich might cost more or less in Bitcoin tomorrow.
Still, you can buy or sell Bitcoins for real currencies online, which is how most people use it.
How to Set up a Bitcoin Wallet
If you plan to withdraw Bitcoins, it’s best not to keep them in an exchange wallet. You should get a dedicated Bitcoin wallet instead—these generally offer the highest level of security and let you control your own private keys. The downside is that fees apply whenever you move money into or out of this type of account.
If you don’t mind paying fees, however, there are a lot of reliable and free wallets out there. Here’s how to set up a basic Bitcoin wallet on Android:
- Choose a free crypto wallet (ex. Trust Wallet, Exodus Wallet)
- Go to “Create New Wallet” and follow the instructions
- Write your 24-words recovery phrase and secure it for future use
- Find a good place to buy Bitcoins (try Coinbase or Binance)
Now that you’ve got your crypto, here’s how to turn it into cash when you’re ready to sell.
How to Withdraw Bitcoins: Useful Tips
You can transfer Bitcoin to cash, but your method relies on where you live. Some regions have a lot of Bitcoin ATMs and retailers that accept BTC. Others may only be able to withdraw to their bank account, which could take a few business days.
Here’s a list of common methods for withdrawing Bitcoin:
Withdraw Through an Exchange
This is probably the simplest way to turn your BTC into cash. If you’re already buying and selling crypto on an exchange, simply place a sell order for however much Bitcoin you want to unload. Once the trade goes through, withdraw your fiat currency straight to your bank account from the exchange site.
Use Coinbase
Coinbase is one of the most popular cryptocurrency exchanges that turn Bitcoin into a stablecoin, which you can then exchange for money.
To withdraw your funds, sign in to Coinbase Commerce and click on the Withdraw button next to your Bitcoin balance. Enter the amount you’d like to exchange and convert your funds to USDC. Next, you can transfer the value of the stablecoin into your account.
There’s a 1% fee for converting and withdrawing your crypto assets besides standard network fees.
CEX.IO
CEX.IO is a long-standing cryptocurrency exchange that allows you to withdraw Bitcoin with a debit card. To get started, create an account on the platform and verify your identity. Once approved, link your card to your account.
Finally, click the Withdraw button next to BTC in the My Wallet section of the CEX.IO Dashboard to start the withdrawal process. The daily visa withdrawal is $50,000 a day.
Try Kraken
Kraken is another top choice for cryptocurrency exchanges. One thing to note is that Kraken has different tiers of account verification, each with varying levels of withdrawal limits. The quickest way to get set up is their starter package, which allows you to withdraw up to $5,000 a day.
Bitstamp
Bitstamp is another exchange that requires users to sell their Bitcoins for US dollars. After selling your coins, you can transfer the profit to your account. Bitstamp charges a withdrawal fee of 0.0005 BTC for each transaction.
Peer-to-Peer Exchange Sites
These types of sites connect buyers and sellers, similar to eBay. This means you can buy or sell directly with another person, without having to go through a centralized exchange site. However, finding a buyer can be time-consuming.
When you trade in peer-to-peer markets, you can pick trades that offer the best prices. This means you have more freedom to pick the best payment method for your needs—and with lower costs.
For example, you can have a buyer forward their payment through PayPal. From there, you can transfer the funds to your bank account.
A popular P2P website, LocalBitcoins, charges 1% for each transaction.
CashApp
CashApp makes selling your Bitcoin simple. Sell by visiting the investing tab and tapping Bitcoin. Below your balance, tap Sell.
Following that, you can transfer the fiat balance from your sale to your bank account.
Get a Cryptocurrency Card
Crypto debit cards are like other prepaid debit cards, except you load them with cryptocurrency instead of cash. They work by automatically converting the Bitcoin held in a crypto wallet into whatever fiat currency is needed to make online and in-store purchases from merchants that don’t accept cryptocurrencies. You can also use them to withdraw cash from ATMs in whatever currencies the card supports.
PayPal
Sell your cryptocurrency holdings on the “Your Crypto” page in PayPal. When you sell Bitcoin, it instantly converts to USD. PayPal will then guide you through the standard withdrawal process.
Cryptocurrency ATMs
Some Bitcoin ATMs work like normal bank ATMs, allowing you to withdraw fiat currency from your crypto balance. You can withdraw using either a QR code from your Bitcoin wallet app or by manually typing in your private key on the machine’s keypad.
Not sure where to find a Bitcoin ATM near you? Search here.
How Much Money Can You Withdraw From a Crypto ATM?
Bitcoin ATM operators are allowed to set their own limits for the amount of Bitcoin they will dispense, as long as they do not violate any federal regulations. Generally, most Bitcoin ATMs have a limit of around $1,000-$5,000 per transaction.
Some ATM operators have special policies for customers who withdraw often and may change the withdrawal limit on request. You’ll always be able to find their contact information somewhere near the ATM to ask.
How Much Are Bitcoin ATM Fees?
The cost of a Bitcoin withdrawal depends on the machine operator and the amount you are pulling out. Most Bitcoin machines charge a flat rate of 5-10% for each transaction, though some have gone as high as 15%. Note that these fees are higher than buying and selling Bitcoin using other methods, such as online exchanges.
How Long Does It Take To Withdraw Bitcoins?
Different blockchains process cryptocurrency transactions; sometimes they get backed up. This can cause delays in processing your transaction, though the exchange will tell you if this is the case.
For small withdrawals, expect to wait a few minutes. Larger amounts may take longer depending on network conditions at the time of your withdrawal.
How to Speed up Bitcoin Transactions?
If you pay a higher transaction fee, the network will process your payment faster. Some exchanges also have a “priority” service that processes your transaction sooner, but you have to pay for this.
You can also speed up transactions by including several small inputs in your withdrawal, rather than one large input. This allows the network to spread out the processing of your funds, making it quicker overall.
Why Is My Bitcoin Withdrawal Taking So Long?
Because Bitcoin is decentralized, there is no one entity that can handle customer complaints about transactions. If you don’t receive the funds within a few hours, contact your exchange to see if they have any additional insight into why the transaction is taking so long.
Additional Verification Is Needed
Sometimes an exchange will require additional verification from you before they release your Bitcoin. This is usually because of regulatory reasons, and it’s nothing to be worried about—it just takes a bit longer for the transaction to go through.
Some common things that an exchange may ask for include an additional ID and a statement proving the transaction. For example, if you want to exchange Bitcoin for U.S. dollars, you would have to provide the exchange with a bank statement showing that you purchased it previously or are being paid through it.
When Is the Best Time to Sell Bitcoin?
If you’re going to part with your Bitcoin, do it on a Friday.
Many traders follow the investment rule to purchase Bitcoin on Friday and sell on Monday. By selling on Friday, you open your customer pool up to include weekend Bitcoin shoppers who are more likely to pay a higher premium for their digital assets.
Cost of Cashing Out Bitcoin
Depending on the exchange you use, there are different fees that will be applied if you decide to cash out your Bitcoin balance. And the fees vary among exchanges. Prices can be less than fifteen dollars, or as much as $100 or more.
Do You Have to Pay Taxes on Bitcoin Withdrawals?
Cryptocurrencies are taxable. The IRS treats crypto income as taxable revenue, meaning that people who make money from digital tokens must report the earnings on a tax return.
Buying and holding Bitcoin is a tax-free activity. You only need to report and pay taxes on any gains when making sales.
For example, if you buy $5,000 worth of Bitcoin and sell it for $6,000 later on, you would have to pay taxes on the profit of $1,000.
What About in the UK?
It’s not uncommon for US investors to look for ways to stop taxes from eating into their income. You might think about banking abroad for lower taxes. Here’s what you can expect.
The United Kingdom government treats cryptocurrencies in much the same way that it does other investments: Capital gains taxes apply to profits made from trading them.
Should You Cash Out on Your Bitcoin?
If you have made a lot of money on your investment, it’s time to sell some and put the earnings into your savings. Because crypto is so volatile, it’s wise to take at least some profits off the table in case things go south.
Besides creating a financial safety net for yourself, another reason you may want to sell your Bitcoin is that you no longer believe in its growth. In investing, it is important to recognize when the time has come to sell a losing position. You should also consider that if you purchased the crypto when its price was high, you will lose more money in total if you don’t sell while it’s still valuable.
Withdraw Bitcoins to Your Bank Account
A question on how to withdraw Bitcoins may seem simple, but it’s actually more complicated than you think. There are a lot of steps involved in this process and it can get tricky when you don’t know what to do.
With our guide, we hope we answered all your questions when it comes down to cashing out your cryptocurrency investments! If there is anything else we didn’t cover here, read about it in one of our other blog posts.