The potential of cryptocurrency has become well known to all and sundry. It’s one thing to invest, it’s another thing to make the right investment and get satisfying returns. The question is no longer whether we should invest in cryptocurrency, but how best can we invest? What are the pitfalls we should avoid when investing in cryptocurrency?
There’s no straightjacket answer to these set of questions, but in this article, I’ll be educating you on the seven common mistakes new investors make in the process of investing in cryptocurrency, and how best to avoid this mistake. It promises to be an insightful read, let’s get right to it.
One tragic mistake many new investors makes is taking rash decisions in fits of panic. The cryptocurrency market is a volatile one, and a person who invests with the expectation of a never ending price surge without any low moments is living in a world of many fantasies. Cryptocurrency over the years has experienced it’s highs and lows, and those who have benefitted from it have done this by exercising patience. Many investors who purchased cryptocurrency during its price boom and sold in feats of panic when prices dropped never got huge returns on their investment, because by the time the market was up and buzzing, they had nothing left to invest.
If knowledge is power, then ignorance is a very expensive commodity we cannot afford to entertain. It has cost many investors their hard earned money. Many people see cryptocurrency as one of the common get rich quick systems. They keep pumping money into it without knowing how the system works. Anything worth your money requires your time and attention. Understand to great extent the technical and fundamental analysis of what you’re putting your money into, it’s prospects and risks. In the cryptocurrency world, the more you know, the better you grow. A simple web search and the advice of an expert could make all the difference.
The cryptocurrency rush has plunged many people into feats of desperation. Some people borrow huge chunks of money, gather all their savings, pension and retirement bonuses, and even mortgage their house, pumping them into the cryptocurrency space. Of course, this might pay off, but when you bring yourself to a point where your entire life depends on it, and you begin to lose your sleep on it’s account, it’s no longer investing, it’s gambling. The first rule of investment is to not invest what you’re not willing to lose. It’s situations like this that lead new investors to make rash decisions in feats of panic and miss the opportunity of profitable returns. Have an investment budget and stick to it accordingly. You don’t have to give your cryptocurrency the keys to the rise or fall of your blood pressure.
Security is Key, in fact, over the short existence of cryptocurrency, thousands of millions of dollars have been lost because people didn’t properly secure their private keys. Being slack security wise is one of the most costly mistakes made by both new and old crypto investors. The failure to keep yourself in tune with the best wallets and cryptocurrency services available, or keeping hard copies and private keys loosely could lead to the loss of your entire investment. Your private keys are your only way of recovering your crypto funds if something happens, so keeping them safe should not be taken lightly. A crucial step to take could be reinforcing your cryptocurrency with two-factor authentication which is available on most security wallets and exchanges. It works by generating a code created by an authentication app on your smartphone. This code would be required when logging into your account, in addition to your email and password, this way, a fraudster who knows your password would not be able to access your account.
Many new investors chase cheap coins with the hopes of earning high returns. They believe cheaper coins have higher chances of increasing in value, and as a result, they have higher chances of huge returns. This however, is a common trap. Many factors affect the price of cryptocurrency, like the circulating supply and the real world value of the coin. Usually, cheap coins usually have huge supply of coins, which waters down the price of each coin. If the coin has huge supply, and it’s real world value is low, then the price of the coin will remain low. If it’s the case that you’re looking for coins with high growth potential, a better factor that should be considered is the market capitalization of the coin. This is a better indicator of a coin’s valuation. If you’re looking for the next big coin, go for coins with low market cap because they have more potential for growth.
Many investors are very emotional about their earnings, losing rest and sleep over a rise or fall in prices. The decisions they make concerning their funds are driven by feelings and beliefs. Decisions made out of fear will only lead to more failures. So try making decisions outside the realm of your feelings. Take your feelings off your money and enjoy the rollercoaster ride filled with it’s ups and downs. Don’t let a drop in price rate or the fear of missing out prevent you from sticking to your goals.
Many investors miss out on huge investment opportunities because they are afraid to take action. When you’re ready to make your first investment, go for it. For many, not investing at all could be the greatest mistake of all. Stop waiting for the perfect moment, time waits for no man. The best investment choices have been made by people willing to take risks. Be wise! Get involved.
Experience is truly the best teacher, but it doesn’t have to be your experience, You can always learn from other people’s mistakes. You can’t afford to make these mistakes when making your investment decision.
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