Home » Costly Mistakes You Don’t Want To Make When Buying Crypto

Costly Mistakes You Don’t Want To Make When Buying Crypto

Are you emotionally ready to join the crypto market?

If you’re reading this article, you definitely know that it’s the most volatile market, regardless of what assets you choose to trade.

Investing in blockchain-based currencies is exciting because the endeavor promises huge returns.

Still, most new investors fall into some common traps because they lack knowledge or have the misconception that the crypto market can be approached the same as traditional markets. 

Don’t get us wrong, you can profit from crypto investing without being an experienced trader, but this subject isn’t something you master overnight.

You accumulate knowledge slowly and learn how to maximize profits and minimize losses.

One of the best ways to do it is by learning from the mistakes of others, but also checking stats every now and then, like the ETH coin price if you want to invest in Ethereum. 

We’ve compiled a list of people’s most common mistakes when joining the crypto sector.

Ready to discover them?

You’re Not Emotionally Ready For a Challenging Financial Ride

As mentioned before, the crypto industry is highly volatile, and everyone knows it.

However, as a beginner trader, you might not fully understand what it means for your finances.

Bitcoin and Ethereum are the most famous digital currencies, and in their long lives, their values decreased by more than 75% on multiple occasions. 

Every couple of years, crypto’s performance registers downturns when the market enters a bear phase.

Crypto investors must keep in mind that massive price fluctuations are the norm, and they should take advantage of them rather than fear them. 

Altcoins, other than Ethereum, often show high volatility.

For example, of the top 10 digital currencies by market cap from 2013, a single one has made it to the 2023 top. 

You Believe That Cheap Cryptos Are Bargains

Just because some digital currencies have extremely low prices per unit doesn’t mean they are good investments.

The cost of an individual unit of a blockchain-based token without context has no meaning.

Most cryptocurrencies can have an infinite supply, and the developers can decide how many tokens they want to produce. 

Instead of looking solely at the crypto’s price, check the overall context of the project to understand how it serves the industry and what utility cases it has. 

You Lack Crypto Knowledge

Beginner investors are often attracted to the hype surrounding some projects, and they purchase tokens without understanding how they work and if they would fit their portfolio.

Purchasing digital currencies you have no clue about or trading tokens without following a strategy that reflects your purposes is a recipe for disaster.

It’s crucial to take time to educate yourself and learn more about the major crypto projects dominating the market.

Ensure that the assets you add to your portfolio match your goals as an investor. 

You Neglect To Diversify

If you ask a seasoned investor for a piece of advice, they’ll most likely tell you never to put all your eggs in one basket.

You can follow it when investing in crypto because diversification reduces the high risk of buying digital currencies.

A shift in the market could trigger the price of an asset to drop overnight and wipe out your entire portfolio if you limit your investments to purchasing a single digital currency. 

Once you gain knowledge about several crypto projects, you can figure out what assets mix well and invest in each of them.

Not all digital currencies do the same thing, so you could diversify your portfolio by purchasing tokens that have different roles. 

You Don’t Know What a Good Asset For Your Portfolio Looks Like

Regardless of the sector you choose to invest in, you need to figure out how a good investment looks for you to get far.

Therefore, it’s crucial to understand what features make an asset worthy of your attention. 

  • A team of reputable developers put the basis of the project
  • The cryptocurrency has a unique utility or function that brings innovation to the ecosystem
  • A diverse and strong community supports it and is ready to adopt any new use case
  • It has a well-written whitepaper that resonates with your purposes
  • The developers presented a road map for future upgrades

The crypto sector is highly competitive, and for a project to survive and succeed, especially during challenging times like a bear market, it should significantly improve the sector and have unique functions.

When a project is able to solve a problem in the real world, it has what is necessary to succeed in the long term. 

You Fall Victim To FOMO

FOMO, or the fear of missing out, is often the reason people invest in crypto projects.

Traders who lack experience usually use social media to learn more about the industry’s state and catch up with seasoned investors.

However, take a closer look at crypto social posts.

You’ll notice that most of them are accompanied by projections that a particular asset will register major price increases in the following period.

It’s challenging not to get caught in a wave of optimism and add the mentioned project to your portfolio.

But it’s crucial to stay as level-headed as possible when trading cryptocurrencies because fear and greed are the two main enemies of an investor. 

When the buzz surrounds an asset, and you come upon a positive news article about its evolution, double or triple-check the validity of the information. 

You should be extremely careful with digital currencies with low market capitalization, regardless if they exhibited significant price increases in recent times. 

You Don’t Know When To Exit The Market

Let’s assume that you bought a promising digital asset that has been ascending.

You witness it rising and rising daily, and you wonder what to do.

If you just entered the crypto market, you might have no idea what happens, and you might hold the asset too long, hoping it’ll become the next Bitcoin or Ethereum.

But one day, it crashes, and you lose all funds. 

You need an exit strategy to provide you with the right setup to make a profit.

You must identify the right moment to sell the assets and move to another investment. 

Are you ready to start trading cryptocurrencies?

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Richard Smith

I am Richard Smith from the USA. I’m an Email Marketing Specialist. I have my own blogging site blogest.org. where people will get all Paid Campaigns and Email Marketing and blogging information. I like to encourage and motivate the new youth generation who want to learn Digital Marketing.

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