Many people have made their millions through crypto trading whereas others have lost their millions. It’s a cruel and unforgiving way to make money, but when you do, you can earn big. In recent years crypto trading has become increasingly popular with the bull run persisting for a couple of years until 2022 when it sloped which has led to a bear market. If you are just starting out on your crypto trading journey, then it is crucial that you do your own research and be vigilant when investing. The issue with crypto is there is no one right way to do it as well as it is unregulated meaning many people tend to make mistakes or alternatively get scammed out of their hard-earned money. In this article, we will go through some common cryptocurrency mistakes to avoid when investing.
Only Investing Because It’s Cheap
If it looks too good to be true, it usually is. When investors start out, they often invest in something due to its low price. If the price is low, do your research and see why it is so cheap. If you are just starting out and are not sure where to start, invest in BTC or ETH as these are always going to have some value.
Cryptocurrencies’ price is extremely volatile meaning that the price fluctuates throughout the day, and now it is becoming more popular to be fluctuating every hour. This is great as the possibility for the price to go up is eventual which makes it good to keep some of these bigger coins.
Investing A Lot Of Money Straight Away
Due to cryptocurrency being volatile, a common cryptocurrency mistake is investing too much too soon or investing a significant amount into one coin. Unlike some forms of investing such as property or jewellery, you don’t have any physical assets that represent your investments which can feel nerve-wracking.
The real issue is if you lose in the crypto game, you lose everything. This is why you should not invest too much too quickly as it may have some serious consequences that you won’t be able to get back from. Instead, only invest what you can afford to lose, this way you will not feel as bad if you lose it.
Falling For Crypto Scams
Unfortunately in this world, we have people trying to make some quick cash by preying on people stealing their money and investments. This is exactly the case with cryptocurrency as it is rife within the crypto world. There are many scams out there and it is essential to understand the types of scams so you know what to look for.
One form of scam involves people asking you to transfer your cryptocurrency to a wallet that will double your investment. Obviously, someone asking you to do this and offering free money is too good to be true. People also try to artificially inflate the price of the currency which in turn increases the value and then when it drops, people get scammed. Other scams include sceptical crypto wallets that have malicious software. To avoid this from happening to you, it is best to choose a major crypto wallet so you know they are reputable.
There are many brokers who are con artists too with many of them looking extremely legit. There are many broker scams out there so it is essential to do your research on brokers before trusting them with your investment.
Forgetting Your Crypto Keyphrase
One of the most common mistakes to be made in cryptocurrency is forgetting your keyphrase for your crypto wallet. Your crypto wallet is what stores your cryptocurrency offline. The huge issue with forgetting your keyphrase is that once you have forgotten it, you can’t reset it.
Due to you not being able to reset the key phrase, this means that if you forget it, you will lose all of your cryptocurrency and it is not retrievable so it is essential that you have a hardcopy of your phrase hidden in a safe place, if you have a safe, this is the best place to put it so you don’t lose it.
A specialist can not even retrieve this for you so it can’t be stressed enough how important it is to have backups of backups for your keyphrase so you never lose it. Many people have lost millions due to this.
Not Having A Diverse Portfolio
Many people building investment opportunities forget to diversify their portfolio, this means that due to your limited portfolio, if this investment doesn’t fall through, you don’t have anything else to be waiting to cash in on. By having a diverse portfolio, you have a range of different options to make your profit. Instead, opt to diversify with property, jewellery, stocks and gold. As we said crypto trading is extremely volatile and it can leave you broke so having a diverse portfolio is a safer option.
Many people have made their millions with cryptocurrency whereas others have lost everything due to the volatility of crypto trading. It is essential you know what you are doing before committing as you could also face losing everything too. Avoid these mistakes and follow these tips and you will have a good start on what not to be doing.