The world of cryptocurrency is full of opportunity and potential, but it is also filled with its own risks and threats that even a experienced investor can fall victim to and end up experiencing significant losses.
Whether you are just starting out on your crypto journey or have been involved in the crypto space for some time, avoiding these pitfalls can help you avoid losing access to your assets and maximise your crypto gains.
Below is a list of the five top crypto mistakes, and more importantly how to avoid them.
Do Your Own Research.
One of the most common mistakes users make when investing in cryptocurrency is not doing the proper required research into a project. A lot of people rely on information from influencers, from unverified sources and general social media “hype” behind a project, without studying the project for themselves.
How To Avoid It.
– Read the whitepaper: Before investing in ANY project make sure that you have read and understood the whitepaper allowing you to understand the purpose and the technology behind the project.
– Who are the team? Always check the team behind the project. It is always a good idea to look into previous projects that the team members have been involved in. Remember, in situations like these, Google is your best friend.
– Use social media, the right way: Joining online communities related to the project to gauge the general feeling and interest in the project, the way its being managed and the timeline for progression is always a good way to feel out any project before you invest.
Never Invest More Than You Can Afford To Lose.
The crypto markets are incredibly volatile, meaning prices can changes dramatically in a very short amount of time. Investing funds that you cannot afford to lose can lead to financial headaches and put the rest of your portfolio at risk.
How To Avoid It.
– Don’t Bet The “Farm”: Only invest disposal income and never start chasing the “moon-shot” dream that is often sold by influencers etc. Remember, if something sounds too good to be true, there’s a good chance that it is.
– Diversify: I’m sure you have heard the saying “never put all your eggs in one basket”. This couldn’t be more true when it comes to investing in the crypto markets. You want to make sure you never have all your funds tied up in a single asset. With how volatile the crypto markets can be, you could be risking losing all your investment from not spreading your investments into multiple opportunities.
– Stop Losses: Like in stocks and shares, with most crypto exchanges you are able to apple a stop-loss to any trades that you have made. These will ensure that if a crypto does suddenly drop off in value you are able to minimise the potential losses.
Be Aware Of Phishing Attacks & Scams.
While the crypto space is filled with potential, it is also fills with scams. These include fake websites advertising “pre-sales” of tokens that will never actually launch, phishing emails attempting to gain access to your accounts and impersonation scams pretending to either be from one of the main exchanges, or claiming that you have a wallet with a large amount of a certain currency that you have no knowledge of ever purchasing.
How To Avoid It.
– Check your URL’s: Always verify a websites URL before proceeding on the website or connecting your wallet to the site. Never enter sensitive information on a website that you are unsure about.
– As we mentioned above, always beware of any claims that seem too good to be true. There are a lot of scammers out there that claim they can promise a “500%” return on your investment within a certain timeframe.
– Two factor security: Whether its on your email, your wallets or your phone. If it is possible to setup and use two factor authentication on your devices, make sure that you do. It adds another layer of protection that will alert you to any unauthorised attempts to gain access to your sensitive information or funds.
– Stay private: Never share your private keys or passwords with anyone and make sure they are stored in a safe place that only you have access to.
Store Your Crypto Securely.
If you leave your cryptocurrency on any exchange without the proper security measures in place you are opening yourself up to unnecessary risks. Over the last few years, many of the major exchanges have been hacked. This have resulted in users of those exchanges losing access to their funds temporarily, or even worse permanently.
How To Avoid It.
– Cold Wallets: Invest in a hardware wallet. You can read about the different types of wallets in our guides section by clicking here.
– Avoid exchanges for large crypto sums: If you are managing large amounts of cryptocurrency, you should always consider storing it outside of an exchange, making sure you have custody of your assets at all times.
Emotional Investing.
Everyone wants to “hit it big” on their first investment. We have all read the success stories online from people who invest a relatively small amount of money into a project and it returned millions almost overnight. These stories pale in comparison to the amount of stories you will find telling you the exact opposite.
How To Avoid It.
– Develop your own investment strategy: Figure out what works for you and stick to it. Don’t be tempted to “bend the rules” for a singular investment.
– Don’t panic sell: As we have already mentioned, the crypto markets are a very volatile space and this can sometimes be concerning to users. You should never panic sell any of your assets as a “knee jerk” reaction to the markets moving.
Crypto Analyst‘s Final Thoughts.
Investing in the crypto markets offers you an huge opportunity, but with this opportunity comes a unique set of risks never really seen before. Avoiding these common mistakes can help you navigate the markets within crypto successfully.
Make sure you are always keeping up to date with the latest news and staying informed in the best ways possible. Here at Crypto Analyst, we offer you a way to stay in touch with the most up to date information, while providing you step by step guides all along the way, as well as are trusted and highly researched information regarding explosive potential coins and much more. You can join us today by clicking here.
Stay informed, practise good security and most importantly stay safe out there!