How to Withdraw Bitcoin: Step-by-Step Guide to Cash Out Crypto

If you hold Bitcoin or other crypto within Cash App or another money transfer app, you can sell it pretty easily. You will pay a fee within the app, but it’s usually pretty reasonable. As a decentralized currency, Bitcoin was originally designed as a peer-to-peer payment system. Sticking with those roots, using a peer-to-peer (P2P) crypto exchange allows you to sell your Bitcoin directly to another individual in exchange for cash. Finally, depending on how long you’ve kept your BTC and your income status, you may also have to pay some income tax come tax season.

1. Some exchanges do identity verification for security reasons, especially if you’re planning to withdraw crypto in larger amounts.
2. Some banks offer real-time payments (RTP), which enables customers to receive instant payouts from the exchanges without the expense of a wire.
3. You have to consider fees, transaction time, and accessibility.
4. Selling crypto for cash has never been easier or more convenient.

Cash out at a Bitcoin ATM

Many crypto exchanges charge high fees if you use their simple “sell my crypto” option. Coinbase, for example, charges $0.99 when selling under $10 worth of crypto (which makes it nearly a 10% fee), and around 1.50% for larger transactions when selling through their platform. The only way around this is to use the “Advanced Trade” platform on Coinbase to sell your crypto, with fees as low as 0.60%. Centralized crypto exchanges are one of the best ways to turn your Bitcoin (or other cryptocurrencies) into cash.

Best NFT Wallets of 2024

The best way to sell Bitcoin for beginners is through a centralized exchange. These platforms are easy to use and they handle matching you with a buyer. But if you’re seeking lower fees, P2P platforms can be an option. Be aware that P2P platforms require more effort to find a reliable buyer and may involve some risk. While the crypto market allows for extensive management and distribution of your digital assets, depositing funds into your bank account will eventually be necessary.

You can also earn crypto rewards that deposit into your Coinbase account (reward rates vary). Online brokerages typically have reasonable trading fees for selling crypto. For example, eToro charges a flat 1% trading fee to sell crypto, which is a fairly low rate. Robinhood does not disclose its crypto trading fees, but averages around 0.50% for crypto trades. Before picking the one to use, consider factors like security, supported cryptocurrencies, withdrawal methods, and fees.

This means that if you hold Bitcoin in a digital wallet or on a crypto exchange, you cannot move it to an online brokerage account to sell. When you cash out bitcoin, the exchanges generally charge a small fee to process the transaction. The fees vary based on which platform you’re using and the method you send your money. An ACH or EFT transaction is relatively cheap, while a wire transfer may cost around $25. Bitcoin ATM withdrawals usually have a variable fee of 7% to 20% based on the amount of the transaction. Bitcoin ATMs are specialized banking machines from which you can buy and sell crypto.

Different Cash Out Methods

But if you think crypto may continue its recovery, it might be better to stick around and wait. For example, Binance is based in Tokyo, Japan, while Bittrex is located in Liechtenstein. If you don’t like the thought of having to wait three days for cashing out Bitcoin, you should consider using a peer-to-peer selling platform like LocalBitcoins. Another way to sell your Bitcoin for cash is to use a Bitcoin ATM. These ATMs work similarly to the classic ones, except you use your crypto wallet to fund the transaction. Basically, you send your token to a specified address, and you’ll get cash in return.

For large BTC cash outs, you can be subject to capital gains taxes. Another thing to consider when cashing out your BTC is that some exchanges and P2P platforms will have withdrawal limits. However, these limits usually only apply if you are cashing out a massive amount of BTC. Withdrawing Bitcoin isn’t always instant, because all platforms have different processing speeds. Most withdrawals are completed in a few hours, but some may take longer. Several exchanges let you cash out faster, but you have to pay a special fee for it.

You can convert bitcoin to cash just as if you sold a stock, piece of art, or vehicle. If you sold your bitcoin for a profit, you must report the income on your tax returns. This is true even if the exchange you sold it on does not provide you with a Form 1099. Federal government treatment and regulation of bitcoin and other cryptocurrencies are still evolving. In some ways, cryptocurrencies act like fiat money you can use to make purchases.

Depending on your wallet funds, you can get a new car, games, electronics, or even your morning coffee. As always, when doing a crypto transaction, check the variance analysis formula with example fees before approving it. Bitcoin ATMs are known for their large fees, so they might not be the best option to sell your Bitcoin. But if for whatever reason this doesn’t work for you, there are other ways. You can use a Bitcoin ATM, peer-to-peer trade your tokens, or even pay directly with Bitcoin. If you’re itching to exchange your crypto for some cold, hard cash, you’ll want to consider the implications of selling.

Once a buyer approves your request, the platform will keep your bitcoins locked until you confirm that you’ve received the buyer’s cash, like an escrow function. This setup makes peer-to-peer platforms especially worthwhile if you’re concerned about scams or fraud while interacting with someone over the internet. Once you’re ready to convert your bitcoin to dollars (or your local currency), the exchange should let you quickly do so.

Selling Bitcoin on Cryptocurrency Exchanges

Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and services, or by you clicking on certain links posted on our site. While we strive to provide a wide range of offers, Bankrate does not include information about every financial or credit product or service. Some exchanges do not allow the conversion or selling of some cryptos to dollars, so you’ll need to take an indirect route to get your cash. Depending on which exchange you use, you may need to transfer or convert your cryptocurrency to another popular currency such as the stablecoin Tether, before finally converting to dollars.

The downside of Bitcoin ATMs is the high fees that most of them charge. In addition to paying network fees to transfer your Bitcoin, ATMs charge service and transaction fees that can exceed 15% per transaction. Overall, selling Bitcoin for cash with an online broker is best when you already hold the crypto assets on the platform. When cashing out Bitcoin, you are most likely going to be subject to some transaction, network or withdrawal fees.

To create a safer environment, most P2P exchanges verify the users to reduce fraud and scams. However, some exchanges allow users to trade without disclosing their identity. Even when this is an option, finding a trading partner can be challenging due to fraud concerns when dealing with an unverified account. Just like the stock and foreign currency markets, the prices of bitcoin and other crypto coins are constantly fluctuating. Exchanges like Coinbase and Kraken allow you to watch the prices rise and fall based on demand, news, regulations, and other factors.

Some crypto enthusiasts are in it for the long haul while others may choose to cash out as soon as they make a profit. Figure out which camp you live in and decide whether converting your crypto into cash is the right finance decision for you at this moment. Coinme is in the business of making it easier for more people to buy and sell bitcoin and cryptocurrencies, whenever they want, and increasingly, wherever they want. After your P2P transaction is complete, you should leave feedback for the buyer. This way, the exchange’s rating system can show other sellers which potential buyers are to be trusted (or not) during future transactions. Reading through various best crypto exchange reviews online, you’re bound to notice that one of the things that most of these exchanges have in common is that they are very simple to use.