Investing in cryptocurrency is currently easier and faster than ever before. Despite having numerous millionaires that gained their wealth from investing in crypto, it’s still far from being a foolproof investment. Many new and pioneered crypto investors have been vexed with the same pitfalls and risks when investing in cryptocurrency, and it’s still causing massive headaches to some up to this day.
However, learning the rules and knowing its potential risks could liberate you from making mistakes that would cost you thousands, if not, millions of dollars. In this article, you will find out the top 4 investing mistakes new, and tenured investors typically make with cryptocurrency that you should avoid.
1. Never Forget Your Tolerance to Risks
When it comes to investing in cryptocurrency, or any other form of investment, never invest what you don’t expect to lose. Investing is a game full of winners and losers. However, an individual can lessen the chances of losing by allocating their investments corresponding to the level of risk they’re willing to take. Breaking your plan on long-term investments can make it hard for you to meet your financial goal. Instead, stick to your long-term investments while distributing a small percentage of your portfolio to assets that have the most potential in returns.
2. Putting Everything, You Have In One Go
One of the biggest mistakes new and tenured investors make is putting all of your eggs in one basket. If you want to enter the game of investing in cryptocurrency, it’s highly advisable to consider spreading your crypto investments across various strategies. Betting all you have in a single asset has a high risk of destroying your financial and investment plans.
Moreover, new investors are getting carried away by the new craze believing that every dip in crypto is a good opportunity in buying. In these cases, investors are at a high risk of losing their capital before gaining any returns. Moreover, when playing with cryptocurrency markets, using leverage should be established with extreme caution and should only be used if you’re knowledgeable enough to do so.
3. Creating an Exit Strategy Before Investing
Buying or investing in any form of asset, particularly Bitcoin, without an exit plan could lead to a disastrous end. To accomplish your primary objectives, you must have a mental framework planned out in advance, and you must have your stop losses in place. As an investor, it is necessary to have exit strategies when investing, as it helps lessen the extreme loss if the market environment keeps getting difficult.
4. Low Prices Doesn’t Always Mean It’s Cheap.
In recent years, there have already been thousands of forms of crypto coins circulating the market, but most of them have no utility or acceptability value. This is where you will make a big mistake as new investors are buying them out of the illusion that they can turn it into a million-dollar investment. With that information, investors are buying meme-inspired crypto coins that can be bought in high volume at a relatively low price. Take Dogecoin, for instance. It is traded at a very low price while being marketed with a high growth rate, giving new traders the expectations that it will make them from millionaires to billionaires.
In the case of Dogecoins, Elon Musk played a massive part in building up its reputation and pushing potential investors into playing with meme-inspired coins. Along with hundreds of other coins being traded in the market, most have eventually disappeared due to low volume and demand. And the results? Investors who took the gamble to become early adopters lose their investments.
If you have read the whole article, you now have the knowledge necessary to invest in cryptocurrency more effectively on trustworthy trading platforms such as Crypto Genius. Moreover, always remember that it is crucial to be knowledgeable in your investor profile, which means you need to have a plan to prevent massive losses. With the rise of Bitcoin, other forms of a cryptocurrency typically follow the market trend, Which could only mean that cryptocurrencies, in general, are expected to perform well in the following years. However, like any other asset, crypto can be extremely volatile, and you should only proceed with caution.
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