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Bull markets come with a problem.



Although it’s a good one to have, it’s still a problem.



I am talking of course, about taking profits.



But taking profits involves selling, which carries with it several disadvantages and risks.



Luckily, the <a href="https://www.thecoinzone.com/blockchain/explained-liquid-loans-defi-protocol-on-pulsechain" target="_blank" rel="noreferrer noopener">Liquid Loans Protocol</a> can help assuage these problems.



<h2 class="wp-block-heading tablecontent">Taking Profits: The Bull Market Problem</h2>



When a user takes profit, on their PLS for example, they have to sell it.



This comes with several disadvantages:



<ol>
<li><a href="https://www.thecoinzone.com/defi/price-impact-vs-slippage" target="_blank" rel="noreferrer noopener">Price Impact</a>. If you are selling a significant quantity of PLS, you entire order will not execute at the current price. Rather, you will get a worse deal than you’d typically expect.</li>



<li><a href="https://www.thecoinzone.com/liquidloans/why-real-estate-investors-understand-ll/" data-wpil-monitor-id="799">Capital Gains Tax</a>. CGT will take a significant portion of your profits on your PLS when you sell. In the USA, for example, CGT is 20%. Meaning you will pay $200,000 for every $1 million you had in price appreciation.</li>



<li>Opportunity Cost. Most people only <a href="https://www.thecoinzone.com/liquidloans/best-time-to-buy-loan/" data-wpil-monitor-id="1403">think of buying</a> as a risk, but selling is a risk too. If you sell your PLS, and a week later the price does another 2X, you’ll be very disappointed that you lost your price exposure. </li>



<li>Wrecking Yourself. Some people will take their profits, and chase the shiny object. This could be a car, boat, watches, memecoins, etc. Then they quickly find that the money they once had is not as abundant.</li>
</ol>



<h2 class="wp-block-heading tablecontent">Liquid Loans to the Rescue</h2>



Although not a panacea, the <a href="https://www.thecoinzone.com/defi/defi-yield-protocol/" data-wpil-monitor-id="290">Liquid Loans protocol</a> can remedy many of these issues.



<ol>
<li>Price Impact. Holders of PLS can open a vault and borrow<a href="https://www.thecoinzone.com/liquidloans/usdl-crypto" target="_blank" rel="noreferrer noopener"> USDL</a> for usually only a 0.5% fee. If this fee is less than the price impact, then they have successfully made themselves more capital efficient. </li>



<li><a href="https://www.thecoinzone.com/pulsechain/smart-holders-will-use-liquid-loans/" data-wpil-monitor-id="1474">Capital Gains Tax</a>. This is of course not legal tax advice, but in most jurisdictions, you don’t pay taxes on loans. Therefore, borrowing off of your PLS versus selling it on the market could be the most efficient way to take profit. </li>



<li>Opportunity Cost. By borrowing instead of selling, users can extract value from their PLS WITHOUT losing exposure to any future positive price action.</li>



<li>Wrecking Yourself. This one is on you. Only you have control over what you do with any profits you make. But maybe, instead of selling and buying a $500,000 car, you put the USDL into the <a href="https://www.thecoinzone.com/liquidloans/stability-pool" target="_blank" rel="noreferrer noopener">Stability Pool </a>and live off the yield.</li>
</ol>



<h2 class="wp-block-heading tablecontent">The Bottom Line</h2>



At some point in the future, the <a href="https://www.thecoinzone.com/liquidloans/dont-dump-on-yourself-cash-out-with-liquid-loans/" data-wpil-monitor-id="978">PulseChain community</a> members are going to be deciding what to do with their PLS bags.



Some are just going to hold, and watch their capital sit there without doing anything. 



Others are going to dump it on the market and buy the lambo.



The smartest PLS holders will use <a href="https://www.thecoinzone.com/liquidloans/dont-sell-your-pls/" data-wpil-monitor-id="1117">Liquid Loans</a> to maximize efficiency while holdings and minimize negative externalities while taking profit.

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Don't Sell Your $PLS For the Shiny Object (Use Liquid Loans Instead)

Click here to learn about why you shouldn't sell your PLS and how <a href="https://www.thecoinzone.com/liquidloans/fully-redeemed-against/" data-wpil-monitor-id="1449">Liquid Loans</a> can help you get the shiny object instead.

Don't Sell Your $PLS For the Shiny Object (Use <a href="https://www.thecoinzone.com/liquidloans/not-a-tradfi-project/" data-wpil-monitor-id="1055">Liquid Loans</a> Instead)