Did you know that there were cryptocurrencies before Bitcoin, but it wasn’t until 2009 that Bitcoin and cryptos became known to the public? If you are looking to level up your crypto investment strategy, we have put together this guide to share the top mistakes for crypto investors to help you stay far away from making these mistakes.
Read on to learn more.
1. Buying at the Top of the Bull Run
A major mistake is to rush and buy at the top of a bull run. This is when a coin goes to its all-time high. The bull run can happen in a matter of hours, or sometimes it can continue on an upward bull run for months.
Bull runs are the worst times to invest in crypto because every single coin goes through a self-correction where the price of the token goes down dramatically. Usually, the token price will go down to a new and lower support than it was before. If you are on top of a certain coin, try to buy as soon as you have an indication that the price is about to go up.
2. Buying on Leverage During the Bear Market
When you begin to trade on leverage you are putting your money at risk even though it can also be rewarding in some cases. You might be tempted to borrow funds from an exchange to use those funds as leverage, but those profits unfortunately will not be maximized.
This is especially true in a bear market when the volatility tends to hit red candles more often than green candles. The key is to buy early so that you are not tempted to use leverage to make money quickly.
Do not allow the fear of missing out to get you to buy during a bull run. This is a costly mistake because normally after a bull run there is a slump. People tend to lose money when they start investing their money during a bull run because of this FOMO.
Keep an eye on the market so that when you see a token flying up to an all time high, you can wait for the correction and then wait a bit before making your investment. Coins tend to go through multiple runs and then back down to a correction value.
4. Not Having a Plan
A major mistake is to not have a plan in place before investing your hard-earned money. The crypto market moves very fast and it is more like living in wild wild west times when it comes to investing and trading.
Although, it has made insane gains at times and catapulting multiple people into a financial status they only dreamed of, it has also crashed overnight leaving people with nothing but losses.
This is why you want to make sure you take the time to make a crypto investment strategy ahead of time. Take the time to research and do your homework. Doing this research will allow you to learn how much risk you can afford to take and how long you should be holding on to your investments.
Keep an eye on new tokens that have a presale before hitting the market. Before investing on these make sure that they seem legit to avoid being scammed out of thousands of dollars.
5. Playing the Short Game
It is important to remember that crypto is still in its baby/toddler stages. It can be compared to the internet back in 1995, when not much could be done with it. Investors want to keep in mind that crypto investments are more of a long term investment where you will more than likely have long gains instead of settling for short gains.
Chasing quick gains equates to losing out on hundreds or possibly thousands in the long term. It is better to search for companies and coins that are setting themselves up to dominate in the future via blockchain technology. There are plenty of companies trying to revolutionize platforms such as video sharing, purchasing sites, etc.
Think about this: if you had invested in the right companies such as Amazon and held on to it for 10-15 years, your returns would have been much greater than selling those stocks at the first sign of profits.
6. Lumping All Cryptos Together
Talking about cryptocurrency as if all coins were the same, is a huge mistake as well. Crypto is a broad term because of the hundreds of coins there are. For example, investing in Safemoon is different from investing in Bitcoin that is a more established coin.
The older coins such as Ethereum, Litecoin, and Bitcoin you can buy and sell at a local ATM where certain newer coins don’t have that option yet. You can discover more here to find an ATM near you that allows you to make a crypto investment in person with only the use of your smartphone.
7. Investing More Than You Can Afford
A major no-no is to invest more money than you can afford to lose. A golden rule is to only invest money that you don’t need if you lose it. If your budget only allows for a $500 investment then only invest that.
Never take out loans or borrow money to make an investment because there is zero guarantee that cryptocurrency will go up in value.
8. Not Diversifying
For those that are newer to the crypto market and crypto world, you might be scared to invest in more than one coin. This is normal because this is much newer technology than traditional stocks.
The great thing about diversifying and investing in multiple coins is that it allows you to stabilize your investments. An example, is if you invest in Bitcoin at $19,000 and the price rises to $30,000 but your Litecoin investment drops then the profits from BTC will make up and stabilize your losses on Litecoin.
Keep in mind that although Bitcoin is the coin with the most value, it does not perform as well as other alt coins because it has been around much longer. You can have a brand-new alt coin go from pennies on the dollar in value to a dollar. This percentage increase can make you an overnight millionaire if you invested enough when the coin was pennies on the dollar.
9. Not Keeping Your Coins Secure
Another major mistake is to not keep your coins in your portfolio safe. Whether you have a $500 or $1,000,000 portfolio you want to make sure all of your assets are safely stored.
It is always best to store your crypto in a hard wallet (such as a Trezor or a Ledger), but make sure you never lose that wallet or else you will lose all your money. If you opt for a digital wallet because you are afraid of losing a physical wallet, enable Two-Factor Authentication (2FA).
This will use either a third party app authenticator or send a text message to your phone with a unique code when you try to log in to your wallet. These extra security measures will keep hackers from accessing your wallet and leaving you with $0.
A good rule of thumb to keep in mind is that if you don’t own the keys to your wallet then they are not technically your coins. If the company you store your coins with owns the coins, then those coins can at any moment become theirs, if they suddenly shut down or disappear. Pay attention to wallets that don’t allow you to own your coins and move your coins out of those wallets ASAP.
10. Allowing Your Emotions to Interfere
One of the worst things you can do is trade based on how you are feeling. Never invest or trade based on your emotions. Instead, you want to use research to invest and trade on evidence and logic vs emotions.
The most successful crypto investors, exercise patience and perform thorough technical analysis when investing their money. After doing an analysis they set targets of when to sell and when to buy. Then, they are patient and wait for those goal numbers to enact their plan.
Ready to Avoid Making These Mistakes for Crypto Investors?
Now that you know the top mistakes for crypto investors, you can stay far away from making any of these. Do not be afraid to invest in crypto because it is a newer stock portfolio, instead make sure that you invest in it rather than sit on the sidelines.
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