Investing in cryptos is often a thrilling experience. But the chances of making mistakes are high, especially for new investors. So, we’ve discovered that there are common mistakes newbies make. And sometimes even oldtimers make the same mistakes.
Mistakes in the crypto space sometimes come at a high cost. You can lose all your assets in extreme cases. So, as part of understanding the crypto market, it’s important that you become familiar with the common mistakes in crypto. Here are ten common mistakes in crypto. We’ll also include how to prevent them as a bonus.
1) Believing Everything You Read
We know you’d like to think that everyone has your best interests at heart. But that’s far from the truth. Most crypto influencers have their own agendas. They probably want to promote a project they are interested in, and that’s not a crime. However, never take a person’s word as your basis for investing. Always do your own research.
There’s such a thing as “authority bias.” That’s when top influencers have a bias toward a project and recruit you in the process. So, the way to avoid this is to think for yourself. Always do your own research before investing. Also, we advise that you have an objective approach to projects. And by that, we mean consider the pros and cons. Get feedback from different sources and make informed decisions.
Keep in mind that most news websites and social media platforms use overblown headlines intended merely to generate clicks, controversy, and FUD (fear, uncertainty, and doubt). So, don’t sell your asset only because you read something threatening. Research on it.
If you’re going to follow someone’s counsel, make sure they are knowledgeable and have a reputation in the industry.
2) Being Too Greedy to Take Your Profit
Let’s assume that a prospective coin you purchased at a good price has begun to appreciate. It keeps increasing and growing, and the big question is, So what happens next?
Everyone fantasizes about this scenario, but many are unsure of what to do when it actually occurs. We all want to make as much profit from an asset as possible to secure our retirement. But, we sometimes get too greedy and end up holding an asset for too long.
Buying strong fundamental crypto gems early & holding is the best money maker💯
& take profits out at big targets rather than always letting it sit.
My portfolio is currently closing in on my Nov ‘21 peak value. & we aren’t even close to the bull run yet.$KAS $SPACE $DNX…
— Braver Crypto (@BraverCrypto) July 13, 2023
This type of mistake is most common in a bull market when a lot of money is lying around. But volatility is one of the labels of the crypto market. That means anything can happen, and your asset will lose its value.
You expose yourself to a great deal of unwarranted risk when you don’t know your aims and limitations with a trade. We advise setting reasonably specific goals and restrictions for how much you want to make and your exit plan before buying a coin. Top traders understand that learning to control one’s feelings and maintain composure under pressure and with huge risks is an asset on its own.
3) Being Slow to Act
Most people make the mistake of being too careful and sometimes too careless. They discover a project and never make a move to invest in it. And when it explodes, regret sets in. We advise that you take time to research a project and make quick decisions on it. Don’t procrastinate on your investment.
4) Waiting for the Price to Get Lower
The prices of cryptos come tumbling during bear markets. But, some people make the mistake of waiting for it to come down. And sometimes they miss a window. For example, BTC crashed to unreasonable prices last year. However, many people failed to seize that window and buy the asset.
Here’s the facts:
– When #Bitcoin volatility gets low in a bear market, it’s very bearish
– When volatility gets low in a bull market, it’s insanely bullish
The Weekly Bollinger BW proves it
Entering the Low Volatility Zone brings big moves
…Bitcoin is in a bull market pic.twitter.com/LdfeM8rMyU
— CryptoCon (@CryptoCon_) July 8, 2023
5) Having a Get Rich Quick Mentality
Some new investors think short-term when investing in crypto. They want to buy today and sell tomorrow. And that’s not always the best. And while investing in cryptocurrencies has the potential to yield enormous returns, it also carries the risk of causing you to lose all of your money in the event of a poor investment decision. We advise that you think more long-term about your crypto investments.
6) Slacking on Security
Trading cryptocurrency still carries some security risks, despite recent security improvements. There are lots of things you can do to stay safe:
- Use an exchange with 2-factor authentication.
- Use cold storage.
- Don’t invest in projects whose founders are relatively unknown.
5/ @Ledger
You absolutely need a hardware wallet.
Doesn’t matter if your wallet is hacked, your computer is hacked, or anything else.
They can’t get into your wallet since you need to press the buttons in REAL LIFE.
No token gets outside of your wallet without a button press. pic.twitter.com/ipALrj3equ
— Crypto Nova (@CryptoGirlNova) July 7, 2023
7) Losing Your Keys
This is closely related to slacking on security. Crypto keys are like the password to your asset. However, unlike regular passwords, you can reset them to recover your keys. If misplaced, they are gone forever, along with your asset in the wallet.
Store your keys safely. It’s best to write them down where you can easily access them and where no third party can get them.
8) Investing Too Much Too Soon
Trading crypto has a learning curve, much like everything else in life. There will unavoidably be errors and losses during your trading career, most likely to occur early on. One common mistake is to invest too much too soon, probably due to excitement. Some projects come with the hype of being the next Bitcoin. And new investors get swayed and invest a lot of funds. Sadly, the hype dies down, and the funds are gone.
In light of this, we advise against investing more money than you can afford to lose if you are just starting out. You can invest small amounts as a test. Also, it’s important to seek professional or more experienced opinions.
9) Not Having a Diversified Portfolio
Spreading your investments among various cryptocurrencies is a good idea if you want to minimize risk and maximize return. It is less probable that all cryptocurrencies will crash at once, so doing this is far more successful than buying just one coin. You can create a plan that is specific to your objectives, risk tolerance, and trading ideologies.
Seeking to add more spice to your #Crypto portfolio? 🌶️
Journey with us on our next episode of #thinkbeforeyouinvest as we go through the landscape of #crypto diversification in our newest video. 📚🔍
Stay connected with #KuCoin – subscribe to our Youtube channel! 📺
— KuCoin (@kucoincom) July 13, 2023
10) Not Prioritizing Knowledge
Knowledge is power, even in crypto. Most investors are driven by hype and invest based on the fear of missing out. That’s risky. Always ensure that you’re improving your knowledge about the market. And different sectors of the industry.
Also, it’s important to know the right tools that will help you maximize your strategy. That’s it for this list. Which of these mistakes have you made in the past? Tell us in the comments.
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