Mistakes To Avoid In The Crypto-Space
Some of the very popular reasons why people start investing in crypto are — Awareness, Fear of missing out, and They were told to invest. Can’t figure it out all!
While investing in cryptocurrency might upgrade your portfolio and may yield you some high returns in the future, there are a lot of mistakes that you might make, unknowingly. If you cared enough to read this article, you might end up avoiding some very common mistakes that beginners make.
Cutting to the Chase!!
#1 Not Reading Enough
People tend to buy/ invest in any coin that is in the news. This practice is not encouraged in long-term investments as the trend may fade away after a while. It was recently seen when the famous DogeCoin got trending and people started buying a meme-coin just because it looked cool.
When you buy a coin, you are investing in the project behind it. You wouldn’t want to invest in a lost cause or in a joke. This is where reading comes into action and helps you make some profitable investments.
#2 Buying out of FOMO
FOMO- Fear Of Missing Out!! I got that too when I saw people becoming millionaires out of crypto. FOMO may lead to an impulsive purchase and that isn’t the best always. Instead of buying out of FOMO, you may start reading and educating yourself about the environment. Since volatility is the closest cousin of the crypto market, impulsive buys may bite you.
#3 Buying Because it is Cheap
“Invest for the value of the token.”
You don’t buy INR 10,000 worth of Ethereum, you own 0.05ETH. The value of INR might increase or decrease due to inflation but the 0.05ETH stays intact. Cryptocurrency is an inflation-ledger and the value of the token stays the same over years. This is why buying “cheap” tokens won’t be the best choice. The coins that are cheap today may or may never boom, at least you don’t know! Instead of investing in coins, you start investing in projects.
#4 Buying more than you can afford to lose
You might have heard stories about how people gained millions of dollars when the graph went up. You might have missed the stories when people went bankrupt after a dip because they sold off all the assets to buy crypto!! yes, that’s true. At the end of the day, crypto is an investment and not a lottery/gambling game where you can put all assets and then hope for the best. This is why buying only as much as you can afford to lose is the smart choice. You may even start with INR 100 to see how things work and integrate over time.
#5 No Diversification
Would you put all the eggs in the same basket ever? Then why would you put all the money in the same crypto?
Diversification is a powerful tool and a technique that would save you from any dip. You may diversify amongst five cryptocurrencies for starters and later move to seven or eight. This is a tough job because you may need to study the history, trends, and projects of the token. While this is time-consuming, it is worth it.
#6 Panic Sell-out
One of the most famous mistakes of all time. Panic selling mainly refers to selling out your crypto as its value in the fiat currency is decreasing. This is not something that any smart investor would do. The market is dynamic and volatile, what does down would come up in a while. One of the major things that you might want to do during a dip is to buy the dip and trade when the graph recovers.
I hope this helps when you start investing!! Come back next Friday for some more of Crypto!!
Coming up soon: How to begin investing?
