Cryptocurrency has become increasingly popular since it was first found. With more people than ever researching how to do it the right way and even more people just winging it and putting their investment in without researching, it is no wonder why so many people get scammed and or lose their money from their own mistakes.
The problem with cryptocurrency is that it is unregulated, yes it is becoming more regulated each year, but this doesn’t stop people from making avoidable mistakes. In this article, we will go through some of the most common beginner crypto mistakes to avoid in 2022.
Common crypto mistakes to avoid
Lack of research
The hype of cryptocurrency has been unheard of, with 1 in every 10 Americans investing in cryptocurrency, it is easy to see why some people can’t ignore the hype. The problem with this is that it has led to many jumping in with two feet and investing in projects that they know nothing about due to the lack of research performed.
It is well known that you need to do your own research with crypto as there are a lot of scams and fake currencies out there. Cryptocurrency is not easy to understand, so investing your time in research is just as important, if not more important than simply investing your money. Learn about the blockchain, cryptocurrencies and solid-state coins.
Not choosing the right crypto exchange platform
Not choosing the right crypto exchange platform can be catastrophic to your investment purposes. This platform is what is going to enable you to withdraw and deposit money from your investment. This step many people rush into and as we said, it can be critical down the line. Here are some factors to take into consideration when choosing the correct platform:
- How user-friendly is it?
- Do they offer a wide array of currencies to invest in?
- Do they offer low fees and good asset pricing?
- Can you buy crypto with your current currency?
- Is the platform authentic and secure?
- Does it provide educational information such as an academy?
- Are they reliable or offer relevant support?
- Do they regularly update their security?
- Do they offer any useful trading features?
Investing all of your capital in a single coin
Anyone serious about investing in anything understands that diversifying your portfolio is an important factor. Putting all of your eggs in one basket is very risky and if the investment doesn’t pan out, then you have then lost all of your money. Diversifying your portfolio will ensure that if one coming doesn’t perform, then at least you have others that might. It is a much better idea to have investments in a range of different currencies that have a strong potential for growth. Investing in crypto can make you a lot of money if you do it safely and correctly, if you don’t it could break you financially.
Investing because a coin is cheap
Just because you see a cryptocurrency with a low price, doesn’t mean that you are getting a deal, they are cheap for a reason. The actual price of a coin is meaningless unless you know more about the coin and its circulation of the coin. The creators of the coin can determine the supply of the coin and if they have say one trillion coins to supply, then the low price will mean that it will be even lower once the supply has been given out or even extended. To identify a coins worth look at value factors such as what the project does and how it is going to help people and also look at the price in the context of how many coins are in circulation compared to future supplies.
Believing everything that you read
If you believe everything you see on the internet, then more fool you. Not all advice is created for the purpose of helping you. A very common mistake that is made in crypto is that more people are on social media than ever, and people are actually listening to people and platforms that they don’t know or have never even heard of. Unfortunately, due to the hype of cryptocurrency, there is a lot of false information which is created to either encourage you to invest in their projects or even scam you out of your hard-earned money. If you have been scammed, speaking to wealth recovery solicitors may be able to help and recover some of your losses.
There are some sites out there such as major ones like newspapers and magazines that create a lot of noise around cryptocurrency, but this is for a couple of reasons. The first is to get clicks on their site, the next is that they want to cause some drama and controversy, and the final reason is that they want to cause doubt, fear and uncertainty. So do your research, but ensure it is from reliable sources.
Buying more than you can afford to lose
A big mistake that is all too common is the fact that people make large investments when they are new to investing and trading crypto that they can’t actually afford to lose. This is the same with any form of gambling or investing, you should never bet or invest more than you can afford to lose.
Chances are you have a mortgage or rent to pay for as well as other monthly expenses that you have to pay to continue living how you do and where you do. If you can’t afford to pay for these monthly outgoings, then you definitely should not be investing in cryptocurrency or any other form of investing or gambling.
When one is new to investing, there are a number of people who forget which way to invest. Buying crypto when the price is high in the crypto game can result in you losing a lot of money. The main aim of investing in crypto is to create profits and then grow your profits. So buying high is not going to make you any profits as stocks always drop which means that you will have to sell your currency at a loss.
The main strategy that beginners should be following is to buy when prices are low, and then sell them when the coins increase in value. This is how you are going to make profits on your investment. But as we said earlier, just because a coin’s price is low, it doesn’t mean that it’s a deal, so do your own research.
There are many mistakes that you can make when investing in cryptocurrency which in turn can result in you losing all of your profits, and all of your investment and will also cause a lot of mental health issues if you have lost all of your money. The best bet when starting out is to start small and grow in time whilst also thoroughly doing your research on all projects that you want to invest in.