Over recent years, cryptocurrencies such as Bitcoin, Ethereum, and Litecoin have garnered a lot of attention and seen steady growth in mainstream awareness. Thus, it is no surprise that an increasing number of people are starting to invest massively in them.
Investing in the right cryptocurrency at the right time takes a great deal of luck but more importantly insights and precision. Cryptocurrencies are highly volatile which means that there are equal chances of either earning big or going bust.
For instance, the legendary meteoric rise of the price of Bitcoin back in 2017, when people rushed to invest in this digital asset that was blowing up only to lose horribly after it’s price plummeted in 2018.
With that in mind, it is crucial to educate yourself about crypto investing and minimize mistakes before setting off on your crypto journey. Hence, here are 4 mistakes every trader should avoid:
Investing In Just One Cryptocurrency.
Bitcoin is considered to be the holy grail of cryptocurrencies. But even if it’s having a bull run at the moment, there are still high chances that it will plummet at any given period, just as any other cryptocurrency, resulting in huge losses.
Cryptocurrencies are highly volatile in nature, making them a much riskier investment. And in such high-risk situations, it is always smart to diversify the risk.
Phrases such as “Don’t put all your eggs in one basket” may sound cliche but there is always a great deal of wisdom behind them. The idea of diversification simply suggests that you’re more likely to lose it all if you bet it all.
In the case of cryptocurrencies, spreading out your money in different coins is essential not only for a healthy cryptocurrency portfolio but for hedging the risk involved as well so that you’re not too exposed to any single investment.
Diversification makes it more likely that you lose some instead of all. And even though you will not be able to entirely benefit from the high returns from owning just one rocket-ship crypto, you will, however, be able to win some, lose some, or both.
Giving In To Peer Pressure.
A common mistake made by most novice crypto traders is not marching to the beat of their own drum.
Making money in the crypto market is definitely no child’s play and you need to have an iron stomach to trade considering how volatile the crypto space is. And even though it can be cruel causing you huge losses, it is equally as rewarding granted decisions are made smartly with patience and the right knowledge.
Solely relying on and making decisions based on the “noise” about a particular coin will not guarantee your success. Instead, you may find yourself in a very financially difficult position soon after. The price of the cryptocurrency could crash suddenly, resulting in a terrible loss.
Hence, investing or divesting based on what “others” might be doing is a path you should separate from and instead take the time to observe and respond strategically to situations.
Investing Without Any Research.
Before investing in a particular cryptocurrency, just like any other asset, your prime concern should be educating yourself on the topic to know what exactly you’re getting into.
Having sufficient and relevant knowledge will not only allow you to make well-informed decisions but it can also help you avoid any major pitfalls that you may potentially find yourself in.
Crypto investments remain unpredictable and highly risky. And if you’re unaware of the market, the cryptocurrency, and its inner workings, you could end up losing a great deal of money.
Overly Invest Or Not HODL Hard Enough.
A great many investors tend to get impatient and let their emotions get the better of them.
The crypto market is made up of cycles that include price surges and slumps. Therefore, making decisions based on emotions can put you in a tight spot.
An easy solution to this is getting expert help. There are now a number of trading platforms that make use of intelligent algorithms to help you take advantage of crypto booms. For example, if you join the bitcoin rush platform, you could significantly improve your ROI without even being an active trader.
Such platforms Bitcoin are powered by both Artificial Intelligence and blockchain. This helps collect and learn information and maintain performance in dynamic markets.