4 Commonly Made Mistakes to Avoid When Investing in Crypto

By: Russell_Fenton

With social media sharing showcasing people making millions off of cryptocurrency - it is natural that others are experiencing FOMO and want to get in on the fun. There is potential for large gains with the cryptocurrency market, however nothing is guaranteed. After reaching a market cap of over $3 trillion in November 2021, the current market cap of the cryptocurrency industry is around $1 trillion in value.

But with such a huge market, the number of people trying to earn off of scams is infinite. There are more than plenty of rookie investors that fall into traps when investing in crypto.

In this piece we are going to show you the basics that you need to know in order to get started with crypto investing. We'll also cover a few major mistakes made by new investors and those still learning how to buy crypto.

Investing Without Prior Planning

No matter the size of the investment, it'll be impossible to make big money without a proper plan and trading strategy in place. Firstly, your investment should be in line with your financial goal, in other words, what you expect to gain. This involves questions like:

1. Are you planning to invest short-term or long-term?
2. How much risk are you prepared to take?
3. Will you completely withdraw the coins once you see a profit?

For instance, if you're planning to hold on to the coins for a while, you'll likely make a profit regardless of how much of an investment you made. This is largely only true for popular cryptocurrencies like Bitcoin and Ethereum since start-ups tend to be unpredictable.

Fear Of Missing Out (FOMO)

Fear of missing out, or FOMO, is a very common psychological response that plagues rookie and veteran crypto investors alike. It refers to the emotion you feel when you miss out on a huge opportunity to make money.

It leads investors to make foolish and spontaneous decisions to jump into or out of their investment too quickly. The only solution to this is discipline and realizing there'll be many more opportunities to make money.

Storing Crypto in a Digital Wallet

Since cryptocurrency is a digital currency, it requires you to have a digital wallet to store it. But although it is very convenient to easily access your crypto wallet online, it's also a lot riskier. Cybercriminals can often access these digital wallets through crypto scams and hacks.

Having an offline hardware wallet can protect your crypto private keys from hackers and significantly reduce the vulnerabilities associated with storing crypto online. An offline hardware wallet is usually just a USB drive with software encryption and some advanced hardware.

Investing Money You Can't Lose

Obviously, no one wants to lose money but investing in crypto is highly volatile, and unexpected results often become reality. While the gains might be significant, so is the risk of a huge loss. Regardless of what you expect, make sure that you're aware of the risks involved with your investment and if you'll be able to handle the worst-case scenario.

That's why you should only invest in what you can afford to lose. You can start being a little dangerous once you're confident in your knowledge and personal experiences.

By Russell Fenton

© 2022 Copyright Russell Fenton - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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