5 Common Mistakes To Avoid While Investing In Cryptocurrency
Blockchain and cryptocurrency is a gigantic industry. The hype is real that’s why it attracts everyone. Every investor looks at it as a tremendous opportunity to make a big profit. But at the same time, it can also result in some massive losses. Before investing in the Crytpo industry you need to think that you’re investing into something from which you’re excepting a lot in longevity and even more than that. You’ve to be Crypto Savvy and if you don’t then your digital currency journey will be a very short one. I’ll highlight some common mistakes here that new investors make while investing in the crypto industry and how to overcome them.
1) Lack of true understanding of Cryptocurrency
The Crypto industry is the game of precision and insight and you’re one of the players. Crypto investors jump right into it without the basic understanding. That results in great losses eventually. You’ve to work on it. Remember, Fast is Slow and Slow is Fast. The process will be time-consuming but the more you dive in the more you’ll be rewarded. Research as much as you can, listen to industry experts, always keep yourself updated, pay close attention to the economics of the coin you’re investing in such as trading volume, circulating supply and price history, etc. Adopt the strategies that’ll help you in long term. Develop a deep understanding of the volatility of different digital assets. Always keep an eye on the trading charts and decide accordingly. If you’ll understand and work on these basics, you’ll have more control of your valuable investment.
2) Going all in for a single cryptocurrency
As you know the nature of all cryptocurrencies is volatile, so you can’t expect a huge return every time by investing in a single cryptocurrency. There are thousands of cryptocurrencies in the market right now and no one gives the surety of profit every time. Most of them promised a lot in the early good times but failed eventually. The value keeps fluctuating as the market dynamics are very unpredictable all the time. When we talk about Bitcoin, we see that it survived a decade and today is at the top of the charts. Still, Even bitcoin price has a rise and fall too.
If you don’t follow the practice of diversifying your investment you’ll highly likely trigger a loss at any moment. So invest your money wisely in multiple cryptocurrencies to minimize the risks of losing the whole investment.
3) Impatience and taking decisions emotionally
Investing in crypto is a thrill ride. The rise and fall of prices come with huge profits and big losses at the same time. The real deal is to keep yourself calm and don’t take hasty and emotionally driven decisions by going after some hyped social media news. It can make you lose your entire investment. Choose a strategy for yourself that will help you to make objective decisions. You need to master the technique of Holding an investment wisely. The holding situation mostly refers to the Term ‘’HODL’’ in the crypto world. It’s the practice of holding on to the investment regardless of the market volatility. You’ll wait for a good return. At the same time don’t always hold yourself to take profitable actions. Act and decide wisely. Think critically that when and where to invest?
4) You’re not paying enough attention to security
As cryptocurrencies are decentralized, it’s the core responsibility of the owner to keep them safe. People have misconceptions and even spreading false news that Cryptocurrencies are foolproof. It all comes from the Blockchain mindset that it’s safe and secure while it’s not. There are several elements of weakness both in and around the system that can present vulnerabilities. The encrypted cryptos are secure as these are confidential. But if you’ll ignore the safety parameters then you’ll be punished for sure. Own a hardware wallet. It’s a smart investment. They’re not connected to the internet that keeps them safe from hackers.
5) Chasing cheap coins
It might appear to be a smart thought to purchase cheap coins and then wait until their value will increase over time. Sounds like a good idea, but what if it doesn’t? The reality is that the cheap coins either have no demand or they’re unproven. It’s not a bad idea at the same time if you’re looking to great future possibilities and investing in cheap coins but an all-time commitment to this mindset and approach is not recommended. As it rarely happens that a cheap coin will be profitable in the future. There is always a reason that some currencies are cheap. Instead of finding that reason, just leave it for the better.
Summing it up, the value of Bitcoin and other cryptocurrencies remarkably dopped due to the Covid-19 pandemic. But in the year 2021 prices are rising and people are becoming a part of this big opportunity and revolution. Big investors are promoting the idea of decentralization. All of it making it a golden time to invest in Cryptocurrency but always remember that it’s volatile. So act smart and play like the champion rather than a newbie.