Every new beginning is the start of a story, and the whole process is exciting, as long as the initial enthusiasm exists. But, the problem with this type of excitement is that it can make us think we can do everything that comes to our minds, including the risky movements and actions that may later cost us a lot.
When we are talking about cryptocurrencies, we can’t do that without mentioning the “hot topic” in recent months – the high Bitcoin rates compared to the fiat currencies. Earlier this year, it’s worth was very low, mostly about the situation at the global finance scene, due to the pandemic, but right now, those who previously invested in these coins can make big money by trading them. As you can read on marketbusinessnews.com, the crypto market holds great potential for new investors, but more important is to remember not to make quick decisions, especially when we talk about these risky things, like cryptocurrencies.
Every beginner thinks he/she has that popular beginner’s luck, and sometimes that’s true, but no one can hold on to it for a long time. Even though it’s expected that crypto investors will learn something about this not that simple field before they become part of it, many of them make the very same mistakes all the time. So, let’s see what are the most common mistakes the crypto investors are very likely to make:
Falling for the “mainstream” and “hype”
When everyone talks about something, you are getting more interested in that. Traditional media, websites, and social media have a huge influence over people’s decisions because they are showing custom-tailored ads, according to their interest. When everyone talks about Bitcoin, it may seem like a great decision to invest immediately. But, don’t make this too obvious mistake, because as the hype goes up, it may fall in a minute.
You must have some strategy for how you will invest in anything, not just the cryptocurrencies. And, you should remember that as the things are getting hyped, they can be easily forgotten in a moment, when something more interesting appears. Take your time and learn everything you should know about the market until you fully understand the benefits and perks, and then you are ready to start your bright career.
They avoid following the news
This market is so dynamic, and every day there is something new. If you don’t rush, you will be crushed as soon as someone who is more interested to get to know everything appears. That means you need to read a lot of blogs and websites that are dedicated to cryptocurrencies, and even try to learn something from the more experienced investors.
At the same time, you need to follow the charts and see how the rates changed over time. This almost historical data will help you understand the trends, and make a personal projection about future fluctuations.
They don’t understand how the market works
Every cryptocurrency has a different technology behind it. For example, Bitcoins can be mined through the blockchain, and that’s a very time and energy-consuming activity since it requires a lot of power for the computers to solve the cryptographic tasks, and mine the coins up.
Ethereum is also based on blockchain. On the other side, there is Litecoin, which is a peer-to-peer cryptocurrency, and the coins are transferred through an open-source protocol. These are important things to know and understand because every investor should know the most basic things about the topic of their interest.
A lot of activity on trading websites
Inexperienced investors may think that if they have a large number of trades, they will increase their worth. But, you shouldn’t overdo it, because it can be really hard to recover if you lose too much money on that. Also, trading fees can be pretty high, and you shouldn’t fall for attractive offers that appear on social media.
The same goes for the exchange. Popular and attractive exchanges often come with high fees, which decrease the profit. Don’t go for the most popular trades and exchanges. Take your time and look for the best ones, that are profitable too.
They don’t protect themselves from scams
Everything you do has a risk of scams. When someone is trying to offer you some great deal, or they ask for huge amounts of money, so they can trade, you must be careful, because the chances there is a scam behind that are great. Another thing you need to be aware of is that many experienced investors have a whole pyramid scheme below them, and they will try everything they need to, to take your money.
You must be especially careful with the suspicious links, and never confirm anything without checking the background. Cheap coins are also a scam because they set unrealistic expectations for potential future growth. If you plan to be a serious investor, then you shouldn’t chase unpopular and cheap crypto coins, because they don’t have much potential for a big return. That doesn’t mean you must avoid them, but you need to have realistic expectations on how profitable they are.
As you can see from this article, understanding the market, and have great knowledge about how it works should be your main priority when you want to invest in it. Cryptocurrencies are a popular topic for almost a whole decade, and it’s normal to wake up your curiosity and try to understand them. Many people got rich because of them, but the number of those who made wrong movements is also big enough, so you can know that it comes with great risk.
Anyway, if you are sure you want to start your crypto career soon, then you need to do it after you get informed about every possible aspect and risk. Use reliable sources and web-platforms to trade with your earnings, and never underestimate the person on the other side of your communication – you are not the smartest one there, and as soon as you realize that, the smoother your activity will go.