Taking profits in crypto isn’t optional. It’s the only way to turn unrealized PNL into real long-term gains.
In a market driven by speculation, hype cycles, and extreme price volatility, price swings of 30%, 50%, or even more are normal. If you don’t have a structured exit strategy, those gains can disappear overnight.
A solid exit strategy protects your capital and secures profits. It keeps emotional decision-making out of the equation. Instead of reacting to the market, you follow a plan. This is where DCA, or Dollar Cost Averaging, comes in.
Most people know DCA as a smart way to enter the market over time. But it’s just as effective, if not more, when used to exit positions in stages. Many crypto investors overlook this opportunity to align exits with investment goals.
We’ll cover how to DCA-out of crypto, why it’s useful, how to automate it, and how it compares to other crypto exit strategies. More importantly, we’ll help you avoid round-tripping your profits and losing everything in the next correction or when the bear market shows up.
Let’s start with the basics.
1. What is DCA?
Dollar Cost Averaging (DCA) is a strategy where you invest or sell a fixed amount at regular intervals, regardless of market price. Instead of trying to time the perfect entry or exit, you spread your trades over time. This smooths out the effect of market volatility and removes emotional decisions from the process.
Originally used as a long-term investment approach, DCA has become popular in traditional markets, such as stocks and ETFs. In crypto, it has become a go-to method for avoiding entry or exit at extreme price points.
Let’s say you’re sitting on a profitable position in Bitcoin or an altcoin. Rather than selling all at once and risking poor timing, you could sell 10% every week, or 20% at predefined price levels. That’s DCA on the way out.
Why does this matter? Because crypto markets can be irrational. Price movements often follow hype, potentially leading to sharp corrections. DCA gives you a structured plan to take money off the table while the market is euphoric at the top of the bull market.
It also helps protect your portfolio while still allowing exposure to future gains. That balance of locking in profits now and staying exposed for long term growth is the core strength of DCA.
Appropriately used, DCA is one of the few strategies that helps retail investors avoid common emotional mistakes while exiting crypto positions.
It's a method that aligns well with clear financial goals and helps build wealth over time (if you're patient and disciplined).
2. DCA for Entry vs Exit (DCA-out)
Most traders and long-term investors first learn about DCA as a method for entering the market. It’s a way to buy crypto gradually, avoiding the risk of going all-in at the top. But DCA works just as well on the way out.
With DCA entry, you’re spreading purchases over time to get a better average entry price. You’re not trying to catch the bottom. You’re reducing exposure to short-term volatility and making more disciplined decisions.
DCA out is the mirror image. Instead of trying to sell at the top, you’re selling in portions to capture an average sale price. You reduce the risk of exiting too early and missing short-term gains or waiting too long and seeing profits vanish.
The goal isn’t to be perfect. It’s to have a clear plan and reduce stress. Crypto is driven by uncertainty and may cause you to lose your hair prematurely...
A DCA strategy allows you to exit positions at regular intervals with more confidence and less emotion, which is always reassuring in highly volatile markets.
Here’s the key difference:
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DCA entry helps reduce regret from buying too high.
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DCA out helps reduce regret from selling too early or too late.
In both cases, DCA supports a disciplined approach to investing that protects your funds and aligns with your overall crypto trading strategy.
3. How to Use DCA-out for crypto
Using a DCA-out exit strategy for your crypto positions starts with clarity. You need a predefined plan, not just an idea to sell “somewhere near the top.”
Start by identifying your investment goals. Are you trying to secure a specific return, take back your initial lump sum, or fully exit before a predicted downturn? Define what success looks like before you act.
Next, decide on the DCA structure. You have two main approaches:
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Time-based exit: Sell a fixed portion of your holdings at regular intervals. For example, sell 10% every week for ten weeks. This method works well during market uncertainty or sideways conditions.
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Target-based exit: Sell portions at specific exit price points. For example, place a take profit order for 20% at $2,000, another 20% at $2,500, and so on. This approach is ideal during a strong bull run, when upside momentum is high. You can either use psychological levels or do a bit of technical analysis & technical indicators to identify key levels: Fibonacci retracements & extensions, value area low and high + point of control of the range, previous all-time high.
Once your plan is clear with a list of selling prices, automate it if possible. Use tools like Merlin to track targets & exit points, set alerts, and follow up with scheduled actions via connected wallets or crypto exchanges. If you can’t automate, use calendar reminders and price alerts to keep your strategy intact and sell at the right time.
Make sure your DCA exit plan adapts to changing market conditions. In rapid price rallies, spacing exits more tightly may help lock in profits quickly. In slower markets, a longer exit schedule may offer better results.
The key is discipline.
Remember to stick to your plan. Review your process, adjust only if needed, and avoid emotional decisions that can derail your crypto exit strategy. The easiest part is to define your exit strategy plan.
While a common mistake is not to follow it when price reaches your targets and to become a "moonboy", always looking for more profits, and usually ending up barely making any money.
Additionally, be mindful of potential tax implications when executing your DCA exit. Selling in smaller chunks over time can reduce the likelihood of triggering higher tax brackets, depending on your local tax regulations. Make it a point to consult with a tax advisor to structure your plan efficiently and avoid surprises later.
Finally, remember that DCA is not a one-size-fits-all solution. Analyze your financial situation, portfolio size, and market outlook to craft a customized exit strategy that aligns with your investment objectives and timeframes.
With a clear plan, proper tools, and consistent discipline, you can exit your position more confidently, rather than relying on a market timing strategy.
4. Tools to Automate DCA (Merlin!)
DCA works best when it’s automated. Manual tracking can lead to missed opportunities or stress-induced decisions during volatile swings with high price fluctuations.
That’s where automation tools come in. With Merlin, you can manage your DCA exit strategy from beginning to end.
Here’s how Merlin helps:
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Custom exit schedules: Set price-based exits.
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Real-time position tracking: See portfolio performance, unrealized gains, and active sales.
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Alerts and notifications: Get updates when price targets are hit or your next portion is ready to sell.
Merlin simplifies a complex process. It helps investors avoid emotional errors and focus on consistent execution. For many crypto investors, this is the difference between reacting to volatility and staying on track with long term financial goals.
While other tools like CoinStats or Blockpit offer tracking, they often lack integrated exit automation. Merlin was designed to close that gap. Giving investors a smarter, more confident way to sell.
5. Pros and Cons of DCA Exit Strategies
Like any strategy, DCA has its strengths and tradeoffs. Understanding both helps you decide when and how to apply it.
Pros:
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Reduces emotion: A disciplined approach helps prevent panic selling and impulsive buys.
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Locks in real profits: Selling in stages means you’re consistently taking money off the table.
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Adapts to most market conditions: Whether in a bull market or high volatility, DCA adds structure.
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Easy to automate: Tools like Merlin make this method seamless and trackable.
Cons:
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Lower returns vs perfect timing: A lump sum exit at the exact top would yield more, but is extremely rare and risky. Not recommended even, if you have a higher risk appetite.
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May feel slow: In fast price surges, spreading out exits could lead to slightly lower returns.
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Takes discipline: Deviating from the plan reduces the benefit of the method.
DCA is not for every investor or every situation. But when used thoughtfully, it’s one of the best tools available for achieving long term growth, reducing risk, and reaching your financial goals.
6. Real-World Examples of DCA Exit Strategies
Example 1: Gradual BTC Exit During a Bull Market
A seasoned investor bought Bitcoin at $8,000 in 2020 with an initial investment of $10,000 and used a price-point-based DCA strategy as the bull run started..
They sold:
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15% at $15K
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20% at $20K
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20% at $25K
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20% at $30K
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15% at $40K
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5% at $50K
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Remaining 5% at $55K
This disciplined approach allowed them to average a solid exit value while maintaining some exposure as the bull market continued.
Despite missing the absolute top, they avoided the emotional decisions many investors face when trying to sell everything at once after the bear market started.
Example 2: Time-Based Ethereum Exit
Another investor focused on long term growth wanted to reduce exposure gradually. They set a clear plan to sell 10% of their ETH holdings every month for six months once BTC hits a new all-time high. Regardless of market conditions, they stuck to their schedule. Using a tool like Merlin, they tracked their sales and protected profits without stressing over short-term gains or losses.
Example 3: Risk-Based Exit from Volatile Assets
Many crypto investors hold smaller positions in high-volatility assets like meme coins. One user tagged these tokens in their portfolio as “high risk” and set an automated rule: if the value of this tag exceeded $5,000, 25% would be sold. This reactive yet structured DCA strategy helped them benefit from price spikes without overexposing their funds to market volatility.
Disclaimer: This is for educational purposes only, not financial advice. Cryptocurrencies are high-risk. Do your research and consult a financial advisor. Copyright Blockheads, LLC. All rights reserved.