cryptocurrency-investment-strategy-mistakes

Crypto Investment Strategy: Don’t Make These 31 Mistakes While Investing

Feng Zhāng 03/08/2024 Crypto Investment, Crypto Market Leave a comment 115 Views

Anyone who is interested can make good profits from investing in cryptocurrency in 2021. All you need is to know the right time and invest in the right time. One such right time was 2017 December when no one could lose. But predicting the right time is very difficult. You just need good luck. One person who has improved crypto investment strategy mistakes one after the other crush the masses. Only skilled, efficient, and disciplined investors are getting away with high profits, the rest are staying back with useless coins.

That is why we are here to strategize on how to drive the best profits from investing in cryptocurrency. For that, all we have to do is keep in mind some mistakes that often people commit and suffer. We should always try to avoid making those mistakes.

Contents hide

1 Common Mistakes That Should Be Avoided While Investing In Cryptocurrency (Crypto Investment Strategy)

2 Conclusion

Common Mistakes That Should Be Avoided While Investing In Cryptocurrency (Crypto Investment Strategy)

Not Knowing The Basics: If you are a beginner, there are high chances that you will want to start trading as soon as possible. But do not rush. First, do good research, study regarding the topic, conduct good market research. This will develop the investment sense in you. Then start trading. You will be a more sound person then. Taking decisions will be easier for you after that.
Not Taking Actions: Every day potential investors miss out on crypto investment strategy because they do not find confidence. But never do that. Always take action. They are risky but risks will allow you to gain knowledge about that field and will also increase your experience. So always take action. There is no problem if you fail.
Not Understanding The Technology: The underlying technology of Bitcoin and other cryptocurrencies make it innovative. So if you do not understand the t technology then it can be risky. As mentioned before do a good study on all the possible technology and procedures of investments in cryptocurrencies before you start trading.
Do Not Ignore Fees: Now that you know how to take action, find out the best exchange rate of all the cryptocurrencies before trading. While trading people often trade small amounts hoping to gain small profits but these small trading does incur transaction fees. Even though the transaction fees are small but when they add up they form a pretty huge number.
Do Not Over Trade: Some traders, mainly new comers tend to do 20 trades a day. That is lethal. Do not even try doing that. That is because eventually many of them lose from fees. After all, they committed bad trades.
Not Understanding Tax Implications: Overtrading also increases your taxations. In the USA and Canada, most people believe they have only tax liabilities on profits. But that is not the case. You owe tax for every transaction you do. So there is no need to overtrade and increase your tax liabilities.
Never Invest Your Life Savings: The very first and most important rule of investing is not to invest more than you can afford to lose. You should be ready to lose if you are investing. This is because the price level fluctuates up and down. So you need to sit calm and enjoy the life you were already leading. Do not invest everything you have in the wish of gaining. You may not gain profit as well.
Do Not Mistake Currencies As Shares: Take time and gain a good knowledge of what you are investing in. Cryptocurrencies are not shared. You do not have any ownership in the company and neither do you receive the dividend. If a company issues you cryptocurrency then there can be instances for the company to gain profit and that will not help you in any way. There can be times when the company gains profit but the coin prices fall.
Do Not Chase Cheap Coins: Never chase cheap coins if you dream of a Lamborghini or a private jet. Low priced crypto coins never have chances of higher return.
Never Think You Are Always Right: It may sound wrong but take my words. You are not always right. Investment is a speculation game that requires some luck even if you are a professional investor. To find success here you have to be right up to some level, not full.
Never Make Sloppy Mistakes: Be patient always. Do not rush while exchanging or transferring any money. Always recheck the addresses of the sender or the receiver. The best way to ensure accuracy is just copying and pasting them. And while doing so just verify the initial two characters.
Do Diversify Your Portfolio: Always try to incorporate diversification in your crypto investment strategy. While it looks lucrative do not put every egg in a single basket. There may be instances where you notice few coins correlate where the value of one coin goes up and another goes down. In that case, invest in both the coins. This enables your investment to be faster.
Do Not Over Diversify Your Portfolio: Always invest in the number of coins that you can track. This means you are keeping with the news and price action. We recommend you invest in a maximum of 10 digital currencies at a time.
Keep Up To Date With All Your Investment: As the number of your invested coins increases, your responsibility also increases. Always ensure to keep up to date with all your price actions and developments. To do this – Follow them on social media and through their blogs, Join the channel they communicate through (For example Telegram), Bookmark the coin’s website.
Always Keep A Plan That You Stick With: There are many investors in the market who hit high on investment. And after hitting that high they want to grow higher and start to invest without keeping other factors in mind. But the market fluctuations do not always yield good results and they face a huge loss. So do not try to be greedy. Set a strategy and work strictly according to that. This will yield you consistent results if not very high profits every time.
Try Taking Your Profits: If your crypto investment strategy is profit generation then you have to sell and gather profit eventually. See previous cases in this market. In 2017, the cryptocurrency investment market faced a big boom. Lots of investors became really rich as they sold for their profits. On the other hand, many have conceptual profits but are overheld into this bear market.
Try Cutting Your Losses: Being stubborn with your decision is easy, but the market functions regardless of how you feel. Do not hold a coin you no longer believe will yield you good profit. It is okay to change things if that benefits you.
Do Not Buy High: Do not buy high valued coins, especially when the coin is near to its all time high value. Why buy Bitcoin for $15,000 when you can buy that for just $3,500? Buying high valued coins may be the right choice for some instances but is a mistake in more cases.
Always Hold Enough Hard: The crypto market is a cycle when there is a drastic change in the rise and fall of prices. Always remember, if you believe in a particular investment then your best bet is to wait and hold strong even if the prices are falling.
Use 2FA: The crypto world is full of opportunities but all are dangerous. One important step towards your strategy on digital currency investment will reinforce the security of your currency. For this, you have to ensure that you apply for 2FA. 2FA stands for Two Factor Authentication. This is another layer of security after login. Most of the cryptocurrency exchanges allow the usage of 2FA.
Do Not Leave Your Coins In Exchange: One of the most popular mottoes in the crypto market is, “if you don’t control your keys, then you don’t control your coins.” Digital currency exchanges are more prone to hackers and are always at risk. When you upload a coin for exchange, the exchange has control over your coins. You have to trust the exchange’s security and not yours.
Get Yourself A Hardware Wallet: To keep your cryptocurrencies safe, it is always a smart option to use a hardware wallet. Since hardware wallets are not connected to the internet or any other server they are less prone to hacking. And in a hardware wallet, you get more control over your keys. If you are using a hardware wallet do not just sit back calmly. There have been many security steps that you need to do in order to ensure the utmost safety of your digital coins. And also keep a backup of your private keys.
Do Not Fall For A Scam: There are lots of scammers in the crypto world, and they are getting smarter with time. So always ensure before taking any actions. Verify every source of information that comes to you and always double check with every investment platform or source before any transaction. Keep your eyes and ears open always.
Avoid Following Shills: Shill is a word commonly used to spread a positive good word about a coin even if it is terrible. So do not believe in shills and start to invest. Do a thorough research first and then make your decision.
Do Not Enter Into A Position Where You Cannot Exist: If you hold a crypto coin that no one wants to buy there you are in an “illiquid market”. Liquidity refers to the amount of simplicity with which an asset can be bought or sold in a market. So it is essential for you to sell your crypto assets quickly and efficiently. If the asset you want to sell has low liquidity then you might have to sell that for a low price.
Do Not FOMO: FOMO means the fear of missing out. It is the time when an investor feels he might lose something big and as a result that he buys assets immaturely. Do not do that. That leads to a bad decision which can have a negative impact on your assets. Also do not sell your assets when panicking.
Understand The Market Dynamics: Bitcoin only accounts for 40-50% of the market shares. There are thousands of other altcoins that work in parallel with Bitcoins. And not understanding these dynamics can lead to poor market investments.
Use The Best Tools Available: The crypto world is filled with people who provide creative and effective investment instruments. Do not solely depend on yourself. Use these tools to yield better results.
Avoid Holding USTD: Tether or USTD is a stablecoin that is valued at $1. Each stable coin is backed up by one USD bank. There are two dangers in holding USTDs:
- - They do not have good past records. Many crypto experts believe that every Tether is backed up by a USD which signifies that if you wish to redeem $1,000 USTD for USD then your $1,000 USTD is valueless.
  - There incurs huge transfer costs which is not feasible for many coin holders.
Understand Trading Charts, Prepare For The Bull Market And Listen To Market Sentiments: As mentioned earlier, it is very important to have sound knowledge about the market you are planning to invest in. There exists a trading chart that shows the market scenario in the form of graphs. Understand them. Use your crypto investment strategy for the bull market and keep a keen eye on the market sentiments.
Earn Interest From Your Crypto: There is no direct provision to earn interest from your digital currency as you do in your banks but you can grow your bags by just holding the cryptos. You can do that in three ways:

1. - Stake your coins.
  - Offer margin lending
  - Avail lending platforms

Also do not only invest in cryptocurrencies. Once you know about the investment market and gather sound knowledge for the same then try to expand your horizon by expanding in the stock market as well.

Conclusion

Since you made it till the end, congratulations! There are many underlying mistakes as well that people tend to commit in their investment journey. So always keep your ears and eye open, keep yourself updated on the things that are happening around and believe in your instincts but also believe in facts while making your crypto investment strategy.

About
Latest Posts

Feng Zhāng

Feng Zhāng is a Bitcoin expert who has gained knowledge on Bitcoin, which involves investment, buying, and mining digital coins. He has been a crypto investment advisor for the last 6 years and is now on this platform to share his investment tips with us.