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How to Cash Out Bitcoin & Crypto in 2025?

How to Cash Out Bitcoin & Crypto in 2025?

Introduction

Bitcoin and crypto as an asset class have seen massive appreciation throughout the past few years. As a result, many crypto holders find themselves wondering about the best ways to convert their digital assets into traditional currency. Whether you're looking to realize gains, cover expenses, or simply diversify your portfolio, understanding how to cash out Bitcoin is important. This article will walk you through everything you need to know about turning your Bitcoin into cash in 2025.

Understanding Bitcoin Cash-Outs

What does "cashing out" mean in crypto?

In the context of cryptocurrency, "cashing out" refers to the process of converting your digital assets into fiat currency (such as USD, EUR, or any other traditional currency). This process bridges the gap between the crypto world and the traditional financial system, allowing you to use the value of your Bitcoin in the broader economy.

However, it's important to note that cashing out isn't the only way to leverage your Bitcoin's value. Secure platforms like Arch offer alternatives that allow you to access liquidity without selling your crypto, potentially providing significant advantages in terms of tax efficiency and long-term growth potential.

Reasons for cashing out Bitcoin & Crypto

People choose to cash out or leverage their Bitcoin for various reasons:

  1. Realizing Profits: As Bitcoin's value fluctuates, many investors cash out when they believe they've made a satisfactory return on their investment.

  2. Covering Expenses: Some may need to convert their Bitcoin to pay for real-world expenses or make large purchases.

  3. Diversification: Investors might cash out a portion of their Bitcoin to diversify their portfolio into other assets.

  4. Tax Purposes: In some cases, individuals may need to sell Bitcoin to cover tax liabilities or engage in tax-loss harvesting.

  5. Emergencies: Unexpected financial needs might necessitate accessing the value of your Bitcoin quickly.

  6. Leveraging Assets: Some investors use their Bitcoin as collateral for loans, allowing them to access cash without selling their crypto and potentially triggering taxable events.

Understanding your reason for accessing your Bitcoin's value is important, as it can influence your choice of method, timing, and how you manage the proceeds.

Factors to Consider Before Cashing Out

Before you proceed with cashing out your Bitcoin or using it as collateral, it's important to consider several factors that could impact your decision and the outcome of your transaction.

Market conditions and timing

The cryptocurrency market is known for its volatility. Consider:

  • Current market trends: Is Bitcoin in a bull or bear market? Understanding the overall trend can help you decide if it's an opportune time to sell or hold.

  • Short-term price movements: Be aware of any recent news or events that might be causing short-term price fluctuations.

  • Future projections: While no one can predict the future with certainty, consider analysts' projections and your own research on Bitcoin's potential future value.

Tax implications

Cashing out Bitcoin can have significant tax implications:

  • Capital gains tax: In many jurisdictions, selling Bitcoin is treated as a taxable event, subject to capital gains tax.

  • Tax rates: The rate at which your gains are taxed can depend on how long you've held the Bitcoin and your overall income level.

  • Reporting requirements: Ensure you understand the reporting requirements in your jurisdiction to stay compliant with tax laws.

Security considerations

Security should be a top priority when managing your Bitcoin:

  • Platform security: Choose reputable exchanges or platforms with strong security measures.

  • Personal security: Be aware of the risks of broadcasting large transactions, which could make you a target for theft or fraud.

  • Transaction security: Double-check all transaction details to avoid sending funds to the wrong address.

Learn more about whether you should sell your crypto.

Methods to Cash Out Bitcoin & Crypto

There are several methods available for accessing the value of your Bitcoin, each with its own advantages and considerations. Let's explore the most popular options:

Cryptocurrency Exchanges

Cryptocurrency exchanges are often the go-to option for many when it comes to cashing out Bitcoin. They offer a straightforward process and often provide competitive rates.

Popular exchanges include:

  • Coinbase

  • Binance

  • Kraken

Step-by-step process:

  1. Create an account on your chosen exchange.

  2. Complete the verification process (KYC).

  3. Transfer your Bitcoin to the exchange wallet (if elsewhere).

  4. Place a sell order for your Bitcoin.

  5. Once the order is filled, withdraw the fiat currency to your bank account.

Pros:

  • Generally offer competitive rates

  • High liquidity for large transactions

  • Often have robust security measures

Cons:

  • May have higher fees compared to other methods

  • Withdrawal process can take several days

  • Require personal information for verification

Peer-to-Peer (P2P) Platforms

P2P platforms connect Bitcoin sellers directly with buyers, offering more flexibility in payment methods and potentially lower fees.

How P2P transactions work:

  1. List your Bitcoin for sale on the platform.

  2. Choose your preferred payment method.

  3. Wait for a buyer to accept your offer.

  4. Once payment is confirmed, release the Bitcoin to the buyer.

Popular P2P platforms:

  • Paxful

  • Bisq

Pros:

  • More payment method options

  • Potential for better rates

  • Can be more private than centralized exchanges

Cons:

  • Transactions can take longer to complete

  • Higher risk of scams (though platforms often offer escrow services)

  • May have lower liquidity for large amounts

Bitcoin ATMs

Bitcoin ATMs provide a physical location where you can sell your Bitcoin for cash on the spot.

Finding and using Bitcoin ATMs:

  1. Locate a Bitcoin ATM near you using websites like Coin ATM Radar.

  2. Visit the ATM and select the 'Sell Bitcoin' option.

  3. Scan the QR code provided and send your Bitcoin to the address.

  4. Once confirmed, the ATM will dispense cash.

Pros:

  • Immediate access to cash

  • No need for bank account transfers

  • Can be more anonymous than other methods

Cons:

  • Often have high fees

  • Limited in the amount you can withdraw

  • May not be available in all areas

Payment Platforms (e.g., PayPal, Cash App)

Some popular payment platforms now offer the ability to buy, sell, and hold Bitcoin directly within their apps.

Available options (dependent on region):

  • PayPal

  • Cash App

  • Revolut

Limitations and benefits:

  • Easy to use for those already familiar with these apps

  • Often have higher fees than dedicated crypto exchanges

  • May have limitations on moving Bitcoin in or out of the platform

Over-The-Counter (OTC) Trading

For those looking to cash out large amounts of Bitcoin & crypto, Over-The-Counter (OTC) trading can be an excellent option. OTC trades occur directly between two parties, without the use of a formal exchange.

How OTC trading works:

  1. Contact an OTC desk or broker (many large exchanges have OTC desks).

  2. Negotiate the price and terms of the trade.

  3. Once agreed, transfer your Bitcoin to the counterparty.

  4. Receive the agreed-upon fiat currency in your bank account.

Popular OTC services:

  • Cumberland

  • Enigma

  • Nonco

  • Large exchanges often offer OTC services

Pros:

  • Ability to move large amounts of Bitcoin without affecting market prices

  • Often provides better prices for large transactions

  • Can offer more privacy than public exchanges

  • Personalized service and potentially faster settlement

Cons:

  • Usually requires a high minimum trade amount (often $100,000 or more)

  • May require more extensive KYC/AML procedures

  • Requires trust in the OTC provider

Crypto-Backed Loans

An increasingly popular option for Bitcoin holders is to use their assets as collateral for loans. This method allows you to access cash without selling your Bitcoin, potentially avoiding capital gains taxes and allowing you to maintain your position in the market.

How crypto-backed loans work:

  1. Choose a reputable platform like Arch that offers crypto-backed loans.

  2. Deposit your Bitcoin as collateral.

  3. Receive a loan in fiat currency, typically a percentage of your collateral's value.

  4. Repay the loan according to the terms to reclaim your Bitcoin.

Pros:

  • Access to cash without selling your Bitcoin

  • Avoid triggering a taxable event

  • Maintain your position in the market, benefiting from any price appreciation

  • With platforms like Arch, enjoy the peace of mind that comes with non-rehypothecated collateral

Cons:

  • Risk of liquidation if the value of Bitcoin drops significantly

  • Interest charges on the loan

Tax Implications of Cashing Out Bitcoin

Understanding and properly handling the tax implications of cashing out Bitcoin is important to avoid potential issues with tax authorities.

Understanding crypto taxes

In many jurisdictions, including the United States, Bitcoin is treated as property for tax purposes. This means that selling or exchanging Bitcoin is a taxable event, potentially resulting in capital gains or losses.

Calculating capital gains

To calculate your capital gain or loss:

  1. Determine your cost basis (the original value of the Bitcoin when you acquired it).

  2. Subtract the cost basis from the amount you received when selling.

The resulting figure is your capital gain (if positive) or loss (if negative).

Reporting requirements

In the US, for example:

  • You must report all crypto sales on your tax return.

  • Use Form 8949 to report your capital gains and losses.

  • Summarize your crypto transactions on Schedule D.

Always consult with a tax professional familiar with cryptocurrency to ensure you're meeting all reporting requirements in your jurisdiction.

It's worth noting that crypto-backed loans, like those offered by Arch, can provide a tax-efficient alternative to selling your Bitcoin. Since you're not selling your assets, you may be able to avoid triggering a taxable event while still accessing the value of your Bitcoin.

Conclusion

There are more ways to cash out your Bitcoin & crypto than ever before. Whether you choose to use a cryptocurrency exchange, a P2P platform, a Bitcoin ATM, a payment app, an OTC desk, or opt for a crypto-backed loan, it's important to consider factors such as fees, speed, security, and tax implications.

FAQs

Q: How long does it typically take to cash out Bitcoin? A: The time can vary from minutes to several days, depending on the method used. Bitcoin ATMs are instant, while bank transfers from exchanges can take 1-5 business days.

Q: Are there limits on how much Bitcoin I can cash out? A: Limits vary by platform and method. Exchanges often have tiered limits based on verification levels, while Bitcoin ATMs typically have lower limits.

Q: Can I cash out Bitcoin anonymously? A: True anonymity is difficult due to KYC regulations on most platforms. Bitcoin ATMs and some P2P transactions offer more privacy, but complete anonymity is rare.

Q: What's the best time to cash out Bitcoin? A: The best time depends on market conditions and your personal financial goals. Many try to sell during price upswings, but it's impossible to perfectly time the market.

Q: Do I have to cash out all my Bitcoin at once? A: No, you can cash out any amount you choose. Many investors practice dollar-cost averaging by selling small amounts over time.

Q: How do I avoid getting scammed when cashing out Bitcoin? A: Use reputable exchanges or platforms, be wary of deals that seem too good to be true, and never share your private keys or seed phrases.

Q: How do crypto-backed loans work, and are they a good alternative to cashing out? A: Crypto-backed loans allow you to use your Bitcoin as collateral to borrow fiat currency. This can be a good alternative to cashing out as it provides access to fast liquidity.

ChainFi, Inc (dba "Arch Lending" and referred to as "Arch" on this website) is not a bank. 


Loan Services. Crypto backed loans (“Loans”) are offered to U.S. borrowers by ChainFi, Inc. NMLS #2637200. NMLS Consumer Access.


Loan Availability. Loan availability may vary based on jurisdiction. Loans are current not available to U.S. residents of AL, CA, DE, HI, MN, MS, MT, NV, ND, RI, SC, SD, TX, VT, VA, or WA or to U.S. businesses in CA, DC, HI, MT, NV, NM, ND, RI, SD, or VT. We encourage you to contact us to determine if our loans are available in your state.


Loan Agreement. Loans are issued pursuant to a loan agreement between Arch and you. This legally binding document outlines your rights, obligations, interest rates, repayment schedules, potential fees, default consequences, and any other terms and conditions related to your loan. Your loan agreement may contain state-specific provisions. By signing the loan agreement, you acknowledge your acceptance of these terms, so please ensure you understand every aspect before proceeding. 


Interest Rates. Annual interest rates are subject to change and may vary based on loan type, the principal amount requested, and the borrower's jurisdiction of residence. 


Supported Assets. For the latest list of supported assets, refer to our Help Center.


No Financial, Investment or Tax Advice Provided. The information on this website, articles, guides, tools, or communications, is for general informational purposes only. It is not, and should not be construed as, financial, investment, tax, or other professional advice. Arch is not a financial advisor, investment advisor, broker, tax advisor, or accounting firm. We do not provide personalized advice or recommendations for your unique financial situation or goals. You should consult a qualified professional before making any financial, investment or tax decisions. Any examples, hypothetical scenarios, calculator results, or general discussions of financial or tax concepts are for illustration only and don't guarantee specific outcomes or apply to your personal circumstances. By using this website, you acknowledge you are solely responsible for your financial decisions and will seek independent professional advice as needed.


No Guarantee of Offers, Loans, or Returns. Your use or access to this website or platform does not guarantee the availability of any current and/or future offer, promotion, terms, loan, or return. All offers, promotions, terms, and loans are subject to availability and the sole discretion of Arch. We reserve the right to modify or withdraw any offering at any time without prior notice.


State-Specific Disclosures. Additional state-specific disclaimers may apply depending on your location. We encourage you to review all relevant disclaimers and terms carefully before proceeding.

*State of Idaho Disclaimer. In Idaho, ChainFi, Inc is doing business as Arch Lending and does not conduct activity under the name Arch.

ChainFi, Inc (dba "Arch Lending"), 595 Broadway, Floor 4, New York, NY 10012


For general questions, visit our Help Center or use the Intercom chat widget in the bottom right corner of any screen on this website. 


For customer service or complaints, email us at support@archlending.com, or call us toll-free: +1 855-272-4670 between Monday-Friday from 9am-7pm ET and Saturday-Sunday from 10am-5pm ET.

© 2025 All Rights Reserved

ChainFi, Inc (dba "Arch Lending" and referred to as "Arch" on this website) is not a bank. 


Loan Services. Crypto backed loans (“Loans”) are offered to U.S. borrowers by ChainFi, Inc. NMLS #2637200. NMLS Consumer Access.


Loan Availability. Loan availability may vary based on jurisdiction. Loans are currently not available to U.S. residents of AL, CA, DE, HI, MN, MS, MT, NV, ND, RI, SC, SD, TX, VT, VA, or WA or to U.S. businesses in CA, DC, HI, MT, NV, NM, ND, RI, SD, or VT. We encourage you to contact us to determine if our loans are available in your state.


Loan Agreement. Loans are issued pursuant to a loan agreement between Arch and you. This legally binding document outlines your rights, obligations, interest rates, repayment schedules, potential fees, default consequences, and any other terms and conditions related to your loan. Your loan agreement may contain state-specific provisions. By signing the loan agreement, you acknowledge your acceptance of these terms, so please ensure you understand every aspect before proceeding. 


Interest Rates. Annual interest rates are subject to change and may vary based on loan type, the principal amount requested, and the borrower's jurisdiction of residence. 


Supported Assets. For the latest list of supported assets, refer to our Help Center.


No Financial, Investment or Tax Advice Provided. The information on this website, articles, guides, tools, or communications, is for general informational purposes only. It is not, and should not be construed as, financial, investment, tax, or other professional advice. Arch is not a financial advisor, investment advisor, broker, tax advisor, or accounting firm. We do not provide personalized advice or recommendations for your unique financial situation or goals. You should consult a qualified professional before making any financial, investment or tax decisions. Any examples, hypothetical scenarios, calculator results, or general discussions of financial or tax concepts are for illustration only and don't guarantee specific outcomes or apply to your personal circumstances. By using this website, you acknowledge you are solely responsible for your financial decisions and will seek independent professional advice as needed.


No Guarantee of Offers, Loans, or Returns. Your use or access to this website or platform does not guarantee the availability of any current and/or future offer, promotion, terms, loan, or return. All offers, promotions, terms, and loans are subject to availability and the sole discretion of Arch. We reserve the right to modify or withdraw any offering at any time without prior notice.


State-Specific Disclosures. Additional state-specific disclaimers may apply depending on your location. We encourage you to review all relevant disclaimers and terms carefully before proceeding.

*State of Idaho Disclaimer. In Idaho, ChainFi, Inc is doing business as Arch Lending and does not conduct activity under the name Arch.

ChainFi, Inc (dba "Arch Lending"), 595 Broadway, Floor 4, New York, NY 10012


For general questions, visit our Help Center or use the Intercom chat widget in the bottom right corner of any screen on this website. 


For customer service or complaints, email us at support@archlending.com, or call us toll-free: +1 855-272-4670 between Monday-Friday from 9am-7pm ET and Saturday-Sunday from 10am-5pm ET.

© 2025 All Rights Reserved

ChainFi, Inc (dba "Arch Lending" and referred to as "Arch" on this website) is not a bank. 


Loan Services. Crypto backed loans (“Loans”) are offered to U.S. borrowers by ChainFi, Inc. NMLS #2637200. NMLS Consumer Access.


Loan Availability. Loan availability may vary based on jurisdiction. Loans are currently not available to U.S. residents of AL, CA, DE, HI, MN, MS, MT, NV, ND, RI, SC, SD, TX, VT, VA, or WA or to U.S. businesses in CA, DC, HI, MT, NV, NM, ND, RI, SD, or VT. We encourage you to contact us to determine if our loans are available in your state.


Loan Agreement. Loans are issued pursuant to a loan agreement between Arch and you. This legally binding document outlines your rights, obligations, interest rates, repayment schedules, potential fees, default consequences, and any other terms and conditions related to your loan. Your loan agreement may contain state-specific provisions. By signing the loan agreement, you acknowledge your acceptance of these terms, so please ensure you understand every aspect before proceeding. 


Interest Rates. Annual interest rates are subject to change and may vary based on loan type, the principal amount requested, and the borrower's jurisdiction of residence. 


Supported Assets. For the latest list of supported assets, refer to our Help Center.


No Financial, Investment or Tax Advice Provided. The information on this website, articles, guides, tools, or communications, is for general informational purposes only. It is not, and should not be construed as, financial, investment, tax, or other professional advice. Arch is not a financial advisor, investment advisor, broker, tax advisor, or accounting firm. We do not provide personalized advice or recommendations for your unique financial situation or goals. You should consult a qualified professional before making any financial, investment or tax decisions. Any examples, hypothetical scenarios, calculator results, or general discussions of financial or tax concepts are for illustration only and don't guarantee specific outcomes or apply to your personal circumstances. By using this website, you acknowledge you are solely responsible for your financial decisions and will seek independent professional advice as needed.


No Guarantee of Offers, Loans, or Returns. Your use or access to this website or platform does not guarantee the availability of any current and/or future offer, promotion, terms, loan, or return. All offers, promotions, terms, and loans are subject to availability and the sole discretion of Arch. We reserve the right to modify or withdraw any offering at any time without prior notice.


State-Specific Disclosures. Additional state-specific disclaimers may apply depending on your location. We encourage you to review all relevant disclaimers and terms carefully before proceeding.

*State of Idaho Disclaimer. In Idaho, ChainFi, Inc is doing business as Arch Lending and does not conduct activity under the name Arch.

ChainFi, Inc (dba "Arch Lending"), 595 Broadway, Floor 4, New York, NY 10012


For general questions, visit our Help Center or use the Intercom chat widget in the bottom right corner of any screen on this website. 


For customer service or complaints, email us at support@archlending.com, or call us toll-free: +1 855-272-4670 between Monday-Friday from 9am-7pm ET and Saturday-Sunday from 10am-5pm ET.

© 2025 All Rights Reserved