Most people who invested in cryptocurrency made a lot of money. Many of these people were not even particularly skilled at investing, and some were just plain lucky. But if you want to make the most of this emerging financial market, don’t leave things to chance.
This is especially true when it comes to crypto because the technology is so new and unfamiliar. Cryptocurrency represents a major shift in how we think about money, store value, and conduct financial transactions. It’s not like any market we’ve ever seen, which is why so many new investors can get into serious trouble.
To help you avoid becoming one of those investors, here are five critical mistakes to avoid when investing in cryptocurrency:
First and foremost, if you’ve just come across the term cryptocurrency, blockchains, or even digital assets and are trying to wrap your head around how it all works, I highly recommend you watch this awesome series first.
I’m also going to assume you’re already familiar with Bitcoin and Ethereum’s basics as well.
Now that we’ve set some context and unlike most of my other posts where I walk you through a specific investment thesis or strategy, today I want to share with you 5 critical mistakes I see people make when investing in cryptocurrencies.
Mistake 1 – Not factoring in taxes when selling your crypto for profit
Mistake 2 – Not having a proper exit strategy in place
Mistake 3 – Relying solely on technical analysis without understanding the fundamentals
Mistake 4 – Buying too late because of FOMO (fear of missing out)
Mistake 5 – Throwing more money into projects after they’ve pumped in price (DYOR)
In this article we will discuss the five most common mistakes that people make when investing in cryptocurrency.
I will also explain how to avoid these mistakes, so that you can use your money more efficiently and also have a better chance of making a profit.
1. Not taking the time to properly research the crypto market before you invest
2. Investing all of your money in one particular currency or altcoin
3. Getting caught up in the hype and FOMO (Fear Of Missing Out) of buying a new coin
4. Not having a clear strategy for when you should sell your coins at a profit or a loss
5. Not keeping your private keys safe at all times
Bitcoin, the most popular cryptocurrency, has been on a tear lately. Just this week, it reached a new high of $11,826 per coin — that’s a 1,600 percent increase since the beginning of 2017.
Meanwhile, Ethereum — the second biggest cryptocurrency which supports smart contracts — has risen from $8 at the beginning of the year to more than $400.
The surge in prices is due to growing interest from investors and companies who see cryptocurrencies as an alternative to traditional currencies. In addition, crypto-specific events like “hard forks” are gaining popularity among speculators — these events can be quite profitable if you buy a virtual coin before the fork and sell it after.
But there are definitely risks when investing in any cryptocurrencies — bubble risk, regulatory risk and so on. So how do you avoid getting burned?
Here are five mistakes to avoid when investing in digital coins:
As cryptocurrencies go mainstream, it’s important for investors to understand the mistakes that can wipe out their crypto wallet.
Here are five of the biggest mistakes to avoid when investing in cryptocurrency.
1. “Investing” in a Coin Because It’s Going Up
2. Buying Just Because It’s Cheap
3. Not Understanding What You’re Investing In
4. Not Having a Portfolio Strategy
5. Ignoring the Red Flags
With the recent surge in interest in cryptocurrencies, I thought it would be useful to share some of my learnings about investing in them.
But before we get started, I want to get this out of the way – I’m not a financial advisor, and this isn’t investment advice. The goal is simply to help you make more informed decisions about where and how to invest your money.
And if you’re interested in learning more about investing in general, I highly recommend the Investopedia Academy – it’s an amazing resource for anyone who wants to learn more about making smarter investments.
You can use this link to get a free 7-day trial.
1. Don’t Invest More Than You Can Afford To Lose
This is an important one. While there are certainly ways you can make money with cryptocurrencies (or any other type of investment), there’s no guarantee that you’ll be successful. And if you don’t have enough money set aside to cover your losses, you could end up in financial ruin as a result of your investment decisions.
If you’re familiar with the stock market, think back to March 2020, when everything was crashing as a result of COVID-19 and the market was falling by double digits on a daily basis for weeks at
As the price of Bitcoin, Ethereum, and other cryptocurrencies continues to skyrocket, more and more people are rushing to invest. However, there are a few potential problems with investing in cryptocurrencies:
1. The market is still largely unregulated. This means that government agencies have little ability to protect investors from fraud or theft…
2. Although several well-known companies have begun accepting Bitcoin as a valid form of payment, most individuals still purchase products and services using traditional fiat…
3. Although many argue that Bitcoin is the best cryptocurrency on the market, others believe that alternative coins such as Litecoin are better positioned to provide long-term gains…
4. The security of cryptocurrency markets has been called into question by a number of high-profile hacks…
5. Cryptocurrency markets can be extremely volatile…