Which 7 mistakes people need to avoid when investing in crypto?
The Cryptocurrency market is booming every day and expanding significantly. It is right now one of the biggest investment opportunities worldwide. Cryptocurrency is like the new normal. Cryptocurrency is a decentralized asset and they are not owned by financial banks and institutions, unlike fiat currency. And so there is a risk of scam. Blockchain technology and cryptocurrencies need to be invested in with much research to not fall into scams.
The crypto world is a combination of opportunity and risk at the same time. Investment in the right cryptocurrency at the right time is a crucial decision. It takes patience and precision. If everything goes right, you are gaining profits. But if things go wrong, you will be in debt. Henceforth, avoid dangerous moves and focus on the right ones when trading in cryptocurrency.
If you are a crypto trader or a beginner in cryptocurrency investment, have a look at these top 7 mistakes that you need to avoid while trading. Not avoiding these mistakes might make you lose all your money.
Not having market knowledge
The most common mistake that crypto beginners do is not having enough knowledge about the crypto market. Many beginners jump directly into trading without having knowledge of what they are investing into. This is exactly like walking on a wrong path.
Whether it’s cryptocurrency or any other investment, the first thing you need to do is educate yourself. Avoid trading with insufficient knowledge. If you want to be successful in crypto world, you need to be familiar with every ups and downs of the market. Crypto demands you to be well-versed with the concepts, stay informed and be knowledgeable. Follow the latest news and read a lot of cryptos content. Being self-informed is the key to avoid scams and earn profits. The more you research, the more you ace it.
Certain factors that you can research on are: Market Capitalization, Price History, Trading Volume, Circulating Supply.
Not Diversifying the crypto portfolio
This is another common mistake among investors.
We all have heard this saying, “Don’t put all your eggs in one basket.” The same goes with crypto world. When you invest all your capital in only one crypto, your risk increases. If the financial market of that crypto goes down, you lose it all. This turn out to be a poor strategy.
To avoid this, always invest in multiple cryptos. By diversifying to different cryptocurrencies you can minimize the risk. People think Bitcoin is the only good option out there. But there are many other cryptocurrencies you can invest in, like Ethereum, Tether, Litecoin and others. So, explore the crypto market, analyze opportunities, invest at the right time and gain profits.
Buying cheap crypto
Another mistake that mostly beginners do is buying a crypto just because it’s cheap. Many investors at beginning invest in low priced coins, hoping to get higher returns in the future. Because they think low priced coins are just underestimated. But it turns out to be a gigantic trap. This could make you lose all your money.
The two factors that affect a coin’s price are–the market value of the coin and the circulating supply. These two factors are completely volatile. Many traders lose their money by investing in cheap coins without doing proper research. So instead of focusing on the unit price, focus on market capitalisation of the crypto. Take your time to research and avoid cheap coins with low market cap.
Leaving cryptocurrency in exchange
There are many reputed cryptocurrency exchanges operating worldwide. But leaving your crypto in exchanges for a long time is risky. Often many exchanges fall victim to hackers and cyber crime.
Recently in April 2021, Cryptocurrency trading exchange Hotbit was forced to shut down because of a cyber attack. It was a famous trading exchange and was operating in almost 200 countries worldwide. Though the funds remained safe. But hackers got hands on user’s financial data, contact information and passwords.
Exchanges are always a huge target for the hackers. Once you own a cryptocurrency, shift it to a hot or cold wallet. Secure your crypto by storing it in a trusted wallet.
Not storing crypto private key securely
Not securing your crypto private keys is by far the biggest mistake crypto traders do. Crypto private keys are prone to cyber-crime, hacking, malicious activities, and theft. Also, the private keys can be misplaced. So whoever gets the access to your private keys has access to your funds. And so you need to keep your private keys safe. If you don’t store your crypto private keys securely, you can lose it all.
The best solutions for your Crypto Private Keys is a Metal Storage Device. Hodlrock (India’s first metal seed storage device) presents a metal seed storage device that stores your hardware & software wallets private keys on stainless steel for generations. Hodlrock’s product Rock96 engraves and store your private keys. It’s a permanent backup for your crypto seed phrase through.
Investing more than you can afford to lose
This mistake can surely put you in debts. It is never advisable to invest, if you can’t afford the looses. Be really careful when thinking about your capital investment. There is a fine line between a resourceful investment and over investment. You need to find this line according to your requirements. Be sure that you are actually investing a worthy amount.
Don’t be overconfident and invest only what you think is affordable for you. If you don’t have an emergency fund backed up, don’t invest in crypto. Also, never borrow money to invest in crypto. If you are a beginner, go for small investments first. An initial small investment will guide you toward future investments.
Buying High and Selling Low
Beginners often do the mistake of buying high and selling low. Cryptocurrency prices keep fluctuating often. It’s a cycle of price rise and fall. This strategy will never earn you profits.
Let’s say you might buy a coin of $15k and then watch its chart price go down to say $10k. This makes traders fear losing the money. Many traders are impatient. They get scared and just sell the crypto for the dropped price. The next day you see coin’s price rising to $20k and then regret selling in loss. You can’t go far this way, Right?
If you buy high, you need to hodl long. Patience is what you need. Don’t let market situations force decisions on you. Wait and watch price charts continuously until you know that it’s the right time.
When you buy cryptocurrency, avoid these mistakes!
Here are a few cryptocurrency investing tips you can keep in mind:
- Have a clear and thorough strategy
- Be careful of cyber scams
- Watch out for the right time to invest
- Understand cold and hot wallets
- Prioritize cryptocurrency privacy
- Stay updated with the latest crypto news
- Don’t over trade
Patience is the ultimate key to success in Crypto Trading.
We always are told to learn from other’s mistakes. So remember these mistakes and try to minimize your crypto risk. Improve your investment practices every day. Always do a thorough market research and analysis before steeping your foot into crypto world.
Though, in such a big market, it’s quite easy to make money. But what’s hard is to keep that and earn even more profits. Don’t let greed rule your mind. And be ready for whatever comes in your way.
To know more read these cryptocurrency blog posts :
Which 10 crypto currencies are best to invest in 2021
Why Metal Seed Storage is best if one want to secure Cryptocurrency keys?