March 28, 2024

TOP 6 mistakes in investments in the cryptocurrency market

TOP 6 mistakes in investments in the cryptocurrency market

At the beginning of 2020, there was renewed interest in Bitcoin and cryptocurrencies. Public mood always followsat the price. Rising prices most often means growing audience attention, and the media unexpectedly begin to make forecasts for new record highs.

Every new positive wave from the mediabrings into the world of cryptocurrencies newcomers who hear that people become rich by investing in cryptocurrencies. However, instead of blindly believing such headings, it is better to study the mistakes of others and learn from them.

When investing in cryptocurrencies, you also needthink about what exactly can ruin your portfolio. You need to know and remember these things, and, following the list, make sure that your cryptocurrency investments are safe and that you are on the path to success.

Succumb to fomo

FOMO is an obsessive fear of missing a goodopportunity or interesting event. This emotion can be associated with thoughts about what someone is lucky, but you - no. For example, you see that someone on social networks says that he “raised decent money” from some kind of coin. This can cause you to respond appropriately and make you regret that you missed such an opportunity.

2017 has become one of the most hype incrypto industry, since bitcoin grew during the year from $ 1,000 to $ 20,000. Those who bought cryptocurrency at a lower price and sold it at the maximum really became millionaires. However, this was preceded by a long patience and faith in bitcoin. Each of us could be in that place, but in reality he was not.

There were also those who bought bitcoin “on top”(at the maximum price), succumbing to FOMO. There are probably people among them who are patiently waiting for the new high point of the main cryptocurrency. But there were those who got rid of coins at a loss to themselves.

Irresponsible investment

A well-known rule among crypto investors is that "you cannot invest more than you can afford to lose."

Everything is very simple. It is unacceptable to invest your rental money; college tuition fees; funds for vacation; funds that you saved for housing, etc. Otherwise, a financial collapse. Do not pay attention to the greedy voice from within, which offers you to "invest more."

It is better to have a specific fund of funds that is used for risky speculation. Some analysts and investors believe that this fund should not exceed 1% of your portfolio.

Setting clear goals and managing risk -not the easiest aspect of investing. However, a working investment plan can clearly demonstrate to you that the difference between a modest income and a total loss of funds is simply enormous.

Another aspect of irresponsible investing may well be blindly following the signals of popular analysts in social networks. Analysts have followers, and therefore they must be "good."

The best way is to test each asset for its fundamental and technical merits. In other words, do your own research (DYOR).

Bottom sale

The flip side of “buying the top” is “selling”bottom ". Looking back, we conclude that "the bottom was not worth selling then." With such a sale, complex and intricate human emotions can work out - rather, panic. However, the relationship of emotions with economic markets is even more incomprehensible.

If investments lose 80% of their value within a few months, then this is apparently enough to make even the most inveterate investor nervous.

Income Bragging

You may have succeeded in cryptocurrencies andfeel like the smartest person. Of course, you can tell your friends about this. Equally well, you can brag to your non-blood relatives who claim that cryptocurrencies are fraud.

HOWEVER DO NOT DO IT, since such a “broadcast aboutvictories ”makes you visible. There are many people in the world who are hated for winning the lottery. And to act as financial experts in their case was not worth it, since a financial expert would hardly need to play the lottery. And for God's sake, do not stick a sticker with bitcoins on your car.

However, you can celebrate and broadcast, especially if people really can learn a lot from your stories and even losing trades.

Ignoring other investments

No need to ignore other investments. If cryptocurrencies work well, this does not mean that there are no other bull markets in the world. Recently, cryptocurrencies have attracted a lot of attention, however, over the past 10 years, the traditional market has constantly shown new highs.

Take a look at this chart of the S&P 500, you may have missed these gains:

TOP 6 mistakes in investments in the cryptocurrency market

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These 10% per annum is not an “abnormal” increase,who have experienced cryptocurrencies in the past. In general, it is a more reliable and less volatile market. Many investors used the opportunities of this market and made good profits.

Carelessness in the storage of coins

If in other types of investments, such as stocks, your assets are available when you enter your portfolio, then in the world of cryptocurrencies everything is different.

In cryptocurrencies, the loss of private keys means that your coins are lost forever. You can see how they grow over time, but you will not have any access to your funds.

There are a lot of people in the world who do not have backupcopies of wallets. A fire or hard drive crash can destroy your cryptocurrency portfolio 100%. People who own coins often become the only “point of failure", while cryptocurrency systems themselves are usually decentralized and impossible to crack.

When cryptocurrency projects update theircode base and wallets, it can also hurt your coins. Crypto communities often remind users of such updates, and you should be aware of the nuances that should be considered when restoring access to your coins.

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