In 2011, an 11-year-old boy named Erik Finman invested 1000 dollars in Bitcoin. Seven years later, that boy became a millionaire in his teenage. There are plenty more stories of cryptocurrencies investment and how people changed their life.
- 1 #1 Confusion in Basics
- 2 #2 Hesitation to Take Action
- 3 #3 No Proper Use of Technology
- 4 #4 Fees Ignorance
- 5 #5 Overtrade
- 6 #6 Poor Understanding of tax Implications
- 7 #7 You Buy Cheap Coins
- 8 #8 Lack of Diversification
- 9 #9 You Over Expect and Don’t Take Your Profit
- 10 #10 You Fall in Scam Traps
- 11 #11 You Don’t Use 2FA
- 12 #12 Poor Research
- 13 #13 You lack Patience
- 14 Final Thought
Though cryptocurrency investment is profitable, due to lack of knowledge and guidelines, your dream of becoming a millionaire can go in vain. If you do not have any strategy, then the chances of multiplying your investment are always dim.
Even the best investors with all-proven strategies repeat some common mistakes. These mistakes can be painful if you are a newbie or running out of budget. Also, you need backup support to go bold in the crypto world.
Furthermore, you need crypto price alerts for the latest price updates and a proven strategy that suits your investment plan. Other than that, if you can check some common mistakes, then you are ready to kick some excellent benefits overnight.
Some of the most common mistakes that people make with cryptocurrency investments are-
#1 Confusion in Basics
You are still not clear about circulation vs. total supply. What are the basics of blockchain technology and bitcoin? You are confused. Even some investors mix up among wallets, exchanges, public keys, and private keys. If you have confusion in basics, then how can you expect a good turnover in cryptocurrency investment.
#2 Hesitation to Take Action
Most investors miss out on significant profit just because they are not confident about getting started. Even some market experts are afraid of taking the right action. It is the unknown fear of losing that holds you back from any potential gain. Because of hesitation, you could not make the right move, and you lose the market trade cheaply.
#3 No Proper Use of Technology
Cryptocurrency or virtual money has deep relations with technology. You are not comfortable with technology, but you want to invest in a cryptocurrency; that is more like shooting bullets in darkness. If you understand consensus algorithms, premining, block rewards, etc. then your chances of good investment scales up in no time.
#4 Fees Ignorance
If you are up for more trades per day, then you are losing a significant amount in fees. Let’s say you are having a trade of 100 dollars 4 times with 4% fees. That potentially reduces 15% of your total capital. So, search exchanges with better fees rate. Even a single percent marks big in long-term business.
Overtrades creates more chances for mistakes. Also, you have to pay a lot more transaction fees for overtrades. Because of overtrading, most beginners cannot assess the market and lose more opportunities beforehand.
#6 Poor Understanding of tax Implications
Because of overtrading, your tax liabilities increase. Even if you go for crypto to crypto trading, that has a tax on every single trade. Most beginners ignore both exchange fees and tax implications. That puts severe impacts on their investment strategy.
#7 You Buy Cheap Coins
Most newbies chase cheap coins to dream private jets overnight. It’s a common misconception that cheap coins double quicker than high-priced established coins.
Suppose there are two coins- 0.5 dollars and 50 dollars. Most people will fall into the trap and invest in 0.5 dollar coins. They believe it is easier to turn it to 1 dollar than a 50 dollar coin to turn 100 dollars.
The price of crypto coins depends on the real-world value and circulating supply. Another important factor is market capitalization. Market cap is calculated as a circulating supply * current price. A low market cap indicates more growth potential, but they have more illiquidity.
#8 Lack of Diversification
As a beginner, most investors don’t diversify their investments. They love to put all their eggs in one basket. In the crypto world, some coins have correlations. So, if one coin goes down, the other goes up. Also, experts believe diversifying is the most effective way of hedging.
#9 You Over Expect and Don’t Take Your Profit
In 2017, there was a big boom in Bitcoin prices. Many investors sold crypto and became rich overnight. But, some investors overheld far more expectations. Because of too many expectations, they could not skim the profit and were instead stuck holding at a loss. In the crypto world, you have to maintain strategy, and you must balance sales and accumulation eventually.
#10 You Fall in Scam Traps
Crypto Space is studded with scammers who are always ready to trap you and steal your coins. To avoid scams, you can double-check the URLs you are clicking on. Other than that, do check domains you land on. There are cases where people land on coiinbase.com instead of coinbase.com.
You will also find plenty of Ponzi schemes like the Bitconnect case. To see whether this site is real or not, you can search it on Google. Just type the website name+scam/ review and search results. Do a bit of research, and you will get to know more about inside stories.
#11 You Don’t Use 2FA
Most newbies don’t enable 2FA and put their money in danger. 2FA or 2- factor authentication is an extra layer of security for transactions. Most exchanges and wallets have 2FA enabled in their service.
#12 Poor Research
If you are weak at research, profitable investments are always in the air. Search your coins review, and try to find social media communities where you can get the latest news on coins. Other than that, you will find talks about scams on Google or Reddit.
Successful investors also look for trading volume, market cap, total versus circulating supply, and price history. You can also check cross-reference opinions from industry experts. The more you research, the better you can make decisions about investments.
#13 You lack Patience
Patience is the key to your crypto success. Only 0.5 dollars Bitcoin sold over 15000 dollars just because of good tolerance. Even the market best investors stick to the bear market with losses and keep patience to strike back. Lack of patience and overtrade dooms your opportunities for nothing. As an investor, you must keep persisting your strategy.
Cryptocurrency is the next-generation digital investment and safe transaction. The market is ever-increasing, and if you can avoid some common mistakes, then opportunities will knock your door. If you overcome these loopholes, your strategy becomes more effective and bold.