It’s easy to get excited about investments and cryptocurrency. There are a lot of common mistakes being made by crypto beginners and novice investors, however. Making these mistakes is a surefire way of losing money fast, but being aware of them, actively avoiding them, and understanding how to navigate this market can actually be quite beneficial.
Let’s take a look at 5 of the most common mistakes made by beginners and what you can do to avoid making them. Simply put, here's what not to do.
1. Do not invest with FOMO
One of the most common mistakes investors make when investing in crypto is FOMO investing, the “fear of missing out”. FOMO investing is when an investor buys a cryptocurrency solely based on the fear of missing out on potential gains. This type of investing is dangerous because it often leads to buying high and selling low.
To avoid FOMO investing, you should have a clear investment strategy in place. This includes doing research on the cryptocurrency you plan to invest in and understanding its fundamentals. You should also set clear investment goals and stick to them, regardless of market volatility.
2. Do not invest without understanding the technology
Many beginners invest in cryptocurrency without fully understanding the technology behind it, solely based on excitement and hype. This can eventually lead to poor investment decisions and significant losses. You’ll need to have at least a basic understanding of blockchain technology and how it works.
To do this, should actually be interested in cryptocurrency, how it works, and what features the specific ones you’re looking to invest in can offer. Understand the technology behind it, just as you would with any other investment. You should invest in it because you believe in it.
3. Do not invest without doing enough research
As mentioned above, research the coin you’re investing in. Look at the team behind the project, its merits, the use case of the coin, and its potential for adoption. Don’t just buy the hype, and don’t listen to influencers, just do your own research. This is a case where that phrase actually makes sense.
Research is essential. There’s an intensely growing number of cryptocurrencies in the market, and each one has its unique features, risks, and potential rewards. Before investing in a specific new coin, it's important to research its history, development team, market capitalization, and use case thoroughly. Stay up to date on a daily basis if possible.
Investing in unproven cryptocurrencies is a significant risk, and a mistake many novice investors have made because of inflated hype. These are coins that have little or no track record and may not even have a proven use case or real user base. Investing in unproven cryptocurrencies is like investing in a startup, and the chances of success are often low.
4. Do not invest without having a plan for volatility
It should come as no surprise to any of our readers that the cryptocurrency market is highly volatile, and prices can fluctuate significantly in a short period of time. Not having a plan for market volatility usually leads to impulsive decision-making, such as panic selling during a market downturn, which we’ve been seeing a lot lately.
Always have a plan. Knowing how to navigate can save your investment. Making a quick buck through a “get rich quick”-scheme is extremely rare. Think long-term, set goals, and make sure you’re investing in an actually promising project.
5. Do not get scammed
There are frankly a lot of ways to get scammed these days. It can happen to anyone, in one way or another. If you’ve been scammed before, don’t be ashamed. The key is understanding way, and how to prevent it from ever happening again.
If something sounds too good to be true, it is. Nobody has made it their goal to make you, a stranger, any money. And they’re never going to. They’re going to do everything they can to get your money. This can be done either via fake NFT projects, fake crypto coin projects, phishing scams, and multiple other creative ways of either tricking you into investing, or getting a hold of your private keys.
Never be impulsive, never believe time limits, and always think rationally. It’s not always easy, but if you take the time, sit back, and think about what you’re about to invest in, you might prevent making a bad call.
Please note that none of this is financial advice. Visit Bitcoincasino.to for gambling guides, reviews, tips, tricks, and top casino lists.