How To Cash Out Bitcoin And Other Cryptocurrency In NZ

Jun 04, 2021

Ultimately, the goal of any cryptocurrency investment is to earn income and withdraw it when it grows at its peak value. As an investor, you learn more about its volatile nature along the way, and you'll figure out the right time to withdraw your funds if you really need it.

So how do you withdraw cryptocurrency, exactly? When is the perfect time to cash out your Bitcoin investment? Is there any way to withdraw your money directly into NZD or other fiat currencies? Is it a complicated process to turn your cryptos back into cash?

Read: Guide To Cryptocurrencies In NZ: Invest, Buy and Trade

How can you withdraw your cryptocurrencies?

You need a cryptocurrency exchange and a wallet to withdraw your crypto investments. A cryptocurrency wallet lets you withdraw the money into a fiat currency like USD, GBP, AUD, or NZD. On the other hand, a cryptocurrency exchange lets you convert your digital money into basic crypto supported by your wallet. 

You need both of them to cash out your cryptos, especially if you have altcoins or other more complex digital currencies. The great news is, some crypto exchanges also have the features of a wallet and vice versa, so you don’t need to get them separately.

Withdrawing from crypto to fiat

For cryptocurrencies that support withdrawal directly into physical currency, the process only includes one major transfer: from crypto to fiat. This is the most common process for basic cryptocurrencies like Bitcoin and Ethereum. Do note that this process may still differ depending on your cryptocurrency exchange or wallet.

1. Transfer your investments from an exchange to a wallet

If your crypto investments are in a separate exchange, you need to transfer them first to a designated wallet. Simply start the transfer from your exchange to your wallet by filling out some of your most basic information. This verification process is mandated by the government. Depending on your crypto wallet or exchange, they may ask you for more information.

  • Full name
  • Mailing address
  • Proof of identification (NZ passport and driver’s license, among others)

If your cryptos are already in an exchange that also has wallet features, you can skip this step, but it still varies per policy of your exchange or wallet.

2. Sell the value of your crypto into the value of fiat

Once the transfer to your wallet is complete, choose to sell it into its NZD value. If this isn’t an option, choose USD instead, then simply convert it into NZD later. Before processing this conversion, make sure to read the fees, taxes, limits, restrictions, and processing time. This way, you can set your expectations accordingly.

Read: How Do Taxes Work With Your Crypto Assets In New Zealand?

3. Initiate the withdrawal process

The final step is to make a withdrawal. Usually, your returns of investment are deposited into the same bank account that you used to purchase crypto. Although, you can always change it before the withdrawal. In most wallets, you can make the withdrawal even without further verification as it’s already processed in the first step.

Converting from crypto to supported crypto to fiat

For altcoins and other cryptocurrencies that don’t support withdrawal directly into fiat currency, your process may take one extra conversion: from altcoin to supported crypto to fiat. Similarly, this process may differ depending on your cryptocurrency exchange or wallet.

1. Convert unsupported crypto into a supported one

This is most common for complex cryptos like Ripple and Stellar, also known as altcoins. If you have these types of cryptos, you need to convert them into basic and supported coins like Bitcoin, Ethereum, or Dogecoin. Simply initiate the transaction at the most competitive rates within your exchange.

Read: All About Dogecoin: From Meme To Top Cryptocurrency

2. Follow the steps of withdrawing crypto to fiat

Once the cryptos are converted into basic supported ones, you can then follow the steps of withdrawing crypto to fiat. However, if you happen to go overseas, you may not need to do the extra steps of converting it to fiat.

Some countries like Australia, Canada, the UK, and the US now have Bitcoin ATMs, where you can withdraw your cryptos directly into cash. As of now, Bitcoin ATMs are not available anywhere in New Zealand.

What are the different ways to withdraw your digital money?

Some cryptocurrency wallets and exchanges support NZD withdrawal for your digital investments. Easy Crypto, Binance, Independent Exchange, and Kiwi Coin are some of the most popular ones that support direct NZD withdrawals. Once you’ve processed the withdrawal, you can deposit it through:

  • Local NZ bank transfer
  • NZ credit or debit card
  • PayPal and other third-party payment options
  • POLi payments
  • Cash

It’s important to note that not all withdrawals are the same. Depending on the method, you have more restrictions or higher fees. Some withdrawals may also take longer to process. Before choosing the withdrawal method for your crypto investments, it’s handy to conduct extra research about these factors.

When is the best time to withdraw your crypto investments?

As with any other investment — be it in the stock market or real estate — timing is crucial. The catch is, there’s no way to tell the right time or date when you should withdraw your crypto investments. What’s more, the cryptocurrency market can be very unpredictable. A single ban, statement, regulation, or tweet from prominent people can greatly make the difference on when you should cash out your money.

However, you’re not left in the dark. Studying the trends and keeping up-to-date with the latest changes in the market can help. Of course, having a professional outlook on your investment can greatly help you determine the perfect time to withdraw your digital currencies. Still, it’s important to watch out for even the slightest changes in the market. This way, you can act quickly whether to withdraw or keep your money in the market longer.

Read: Bitcoin Plummets: Should You Pull Out Your Investments?

Why is it not recommended to invest in crypto in the long run?

As mentioned, even a single ban can greatly change the value of your investments. While professional and experienced investors can make this possible, it’s not recommended because the market is very volatile. Here’s a perfect example:

When Bitcoin peaked in December 2017, its value skyrocketed to USD19,783.06 — the highest since its creation. Before that, one coin was only valued at $998. Given the uncertainty about cryptos, this peak value didn’t last long. Just the day after, it lost almost 30% of its value!

Another great example of cryptos’ volatility is Bitcoin’s plummeting value that happened just this year. Tesla CEO Elon Musk announced that it will no longer accept Bitcoin payments in its line-up of electric cars. This is just one month after he initially announced his USD1.5 billion Bitcoin investment. Shortly after his decision to not accept the crypto, it lost over 30% of its value in just over a week!

Seems like a lot of work! Should I still invest in cryptos?

With its unpredictability, should you still invest in cryptos? Well, it’s your call!

Some people have found their success stories just because of their cryptocurrency investment. An American man invested almost a USD100k amount of Ethereum back in 2016 and earned USD13 million only after a year of investing. If you have the drive to learn about investing in crypto, you may even earn more than this man got in less than a year!

Nonetheless, don’t invest all of your life savings in crypto! Diversify your investments to KiwiSaver, stocks, or even real estate, so you have some back up if one market crashes. Make sure you use a trusted investment platform that can help you grow your money astronomically.

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