10 Crypto Investing Mistakes: Investing in crypto can be fun, but many new buyers fall into common traps when trading and investing in cryptocurrencies. New buyers can lose money quickly if they don’t know how to keep their money safe or don’t know enough about the crypto markets.
We’ll talk about the 10 biggest mistakes that new crypto buyers usually make and how to avoid them.
1. A Lack of Basic Crypto Knowledge
All the buzz about Bitcoin and other cryptocurrencies may make new crypto buyers want to get in on the action, but to invest in crypto, you need to know what it is and how it works. Investing in something you don’t understand or trying to trade Bitcoin without knowing how it works at the most basic level is a sure way to lose money.
If you take the time to learn about the goals of each crypto project and company, you will be a better investment.
2. Ignoring Fees
Even though there are many ways to buy cryptocurrency, some new buyers might just buy it without knowing how the gas fees on exchanges work.
For example, if you buy crypto with a credit card, you may have to pay a huge surcharge fee (3% or more) and your card company may also charge you extra fees. You will save a lot of money over time if you learn which crypto platforms have low fees and the best way to buy and sell crypto.
3. Thinking in the short term
Many new buyers only think about the short term because they want to “get rich quick” in the market. And while it is possible to make huge profits from a crypto trade, it is also possible to lose all of your money if you make a bad move.
Having a long-term investment mindset will help you pick your crypto investments more carefully and focus on high-quality projects that have been around for a long time. Trying to get rich in 90 days is a quick way to go broke, but if you think of buying in crypto as a process that takes years, you’ll be able to build a better crypto portfolio.
4. Keeping Cryptocurrency in Online Wallets
Cryptocurrency is a form of digital money that can only be stored in a digital wallet. Using an online wallet is more handy, but it is also a lot riskier than keeping your cryptocurrency in a physical wallet.
Online wallets are more likely to have bugs, and hackers can use crypto scams or hacks to take money out of your wallet. An offline hardware wallet, which is basically a USB stick with advanced hardware and software encryption to protect your crypto secret keys, is the safest way to store your crypto.
5. Forgetting Passwords or Seed Phrases for Cryptography
Cryptocurrency is kept in a digital wallet, and to get into these wallets, you need a password. If you forget your password, you might not be able to get your coin back.
Most wallets have a backup seed phrase that lets you get to your money, but if you lose or forget that phrase, you may not be able to get your money back.
6. Wrong Address for the Wallet
Transferring cryptocurrency between digital wallets is how you get your cryptocurrency from an exchange or give money to someone else. But a common mistake made by new investors is typing the wrong wallet address when they try to move crypto funds to their wallet.
When this happens, the cryptocurrency is sent to the wrong wallet address, and it might not be possible to get it back. There may be healing services that can help, but it could be very expensive.
7. Getting Ripped Off
Since cryptocurrencies are a new type of product, the market for them is full of con artists. In fact, the Federal Trade Commission (FTC) said that stolen crypto assets were worth nearly $700 million in 2021 alone.
These thieves use clever phishing methods to get into your crypto wallet and get you to send money to their wallet.
Scams involving crypto can happen through email or chat apps. The scammers will act like they are looking out for your best interests. Wallets can be hacked by connecting them to an app and giving it approval to access funds. Even though this is how many crypto apps work, scammers can use it to steal money from crypto wallets.
To avoid these scams, never connect your online wallet to an app you don’t trust, and keep most of your crypto funds in offline hardware wallets. Also, you should never share your wallet’s password, seed phrase, or secret keys with anyone.
8. Using Pressure
Some new crypto investors may be tempted by stories of people going from poor to rich by selling crypto and trying to use leverage to boost their returns.
The problem with leveraged investing is that you have to put up collateral up front, and if a trade goes wrong, you could lose all of your money. Remember that leverage can also work against you and make your losses bigger.
For new crypto investors, it’s best to avoid trading with leverage and wait until they have enough trade experience to use it.
9. Trading Strategy That Is Too Complicated
If a YouTuber tells a new crypto investor to jump right into complex trading tactics, they can quickly lose money and give up on crypto as a whole. It takes time to learn about trend analysis, conditional orders, and how the crypto markets work.
It can be easy to invest in cryptocurrency. To try to grow your portfolio, you don’t need to come up with a difficult trading plan. Dollar-cost averaging is a way to invest in a cryptocurrency that is similar to traditional investing. You don’t have to trade actively or look at coin charts 24 hours a day.
10. Order Errors
Some crypto exchanges, like Coinbase, make it easy to buy crypto, but many have confusing order forms and trade platforms that can be hard for new users to understand.
When making an order, a simple mistake with a decimal point could cost thousands, which would add up to a lot of money lost. In fact, a recent mistake by a seller who sold a premium NFT for 0.75 Ether instead of 75 Ether cost him nearly $300,000.
Always double-check your orders or transfers before sending them in to avoid making these costly mistakes. Since crypto transactions can’t be taken back, it’s best to be sure before you send money.