Are you thinking of starting to invest in cryptocurrencies? And you want to know the best investment tips? Or maybe you’re a businessman, and you believe you make too many mistakes. Below, we provide you with cryptocurrency investment tips and mistakes to avoid.
Mistakes in cryptocurrency investing
Cryptocurrencies (digital currencies) are expanding significantly and they have become a great investment opportunity. At the beginning, there were doubts about them, but now many banks and financial institutions are investing in Bitcoin with large sums of money and launching their own cryptocurrency services, the skepticism is gradually fading away. .
With the release of such news, attention is now on cryptocurrencies and Bitcoin actually has the highest number of active addresses since 2017 when it reached $20,000.
Tips for investing in cryptocurrencies
Cryptocurrency investment tips are always useful as they help investors and especially cryptocurrency newcomers to shorten their path to success.
Educate yourself about cryptocurrencies
You should take cryptocurrencies seriously and think of them as a way to get rich quick. In the traditional way of saving, we most likely save through banks and financial institutions. If we need help or if we make a mistake sending money to the address, we can contact customer service and they will refund the transaction.
You have to remember that this does not happen with cryptocurrencies. No one owns them. They don’t have a CEO. They are completely decentralized and if you are a victim of a scam, there is no going back. Therefore, cryptocurrency and blockchain technology seriously, and through this you will be able to recognize what is allowed on the Internet and what is fraudulent.
1. Choose the strategy you are most comfortable with
There are several strategies by which you can profit with cryptocurrencies. However, taking into account your experience, you should choose the strategy that you are most comfortable with. For example, the need for more skill and knowledge in reading charts and predicting market movements. In contrast, HODLing does not require special knowledge because you can just buy a coin and wait for its value to increase. So it all depends on your experience and eagerness to learn.
2. Understand volatility
By nature, cryptocurrencies (digital currencies) are volatile, meaning their prices often go up and down. In fact, it is considered as a good opportunity for investors to make profit and if you manage to understand the volatility, then you can design a better investment strategy. In addition, you should mentally prepare yourself for the price change and not get emotional and not be too surprised. Expect everything when it comes to cryptocurrencies!
3. Beware of scams! Do you have research?
The internet is known for the opportunities it gives you to make money, but also for the many scams and hacks that have happened throughout history. Even early cryptocurrencies have been described as scams by many people, even influential celebrities. Today, fraud in the world of digital currencies is presented as an “opportunity” for investment.
Sometimes when you wake up in the morning, you may see your email with bold and legitimate offers, but they are scammers trying to take advantage of any potential victim. You may be offered to invest in “genuine cryptocurrencies” but in fact, they are scams.
OneCoin is one of the most famous crypto scams. A Bulgarian lady, Roja Ignatova, introduced the coin as completely legal and attracted investors by raising $4 billion. Authorities identified it as a Ponzi scheme . So, be careful, don’t rush, research and move forward in your business adventures.
4- Take your profit
If you spend a long time HODLing your investment and you see that you have enough profit to take, don’t hold too long and take your profit. One might think that maybe you are in a hurry, but if you have, say, 600% profit, you have nothing to wait for. If you continue to HODL after 600% profit, it might be too much because when we talk about cryptocurrencies, you never know they can crash and you won’t have any more profit. In fact, you risk even losing the money you have invested.
5- Try to invest in cryptocurrencies at the right time
We can call this differently the “buy low and sell high” rule. Investing at the right time is the most important component when it comes to cryptocurrencies, especially for HODLers. For example, if we go back to 2017 when cryptocurrencies experienced a dramatic price increase, those who had invested during a period when the price of Bitcoin was very low, made huge profits as the price rose. Although it depends on a bit of luck, those who are always up to date always know when to invest their money.
Another example is now during the time of the Corona virus. Bitcoin touched almost 3000 dollars at the beginning of 2020 and then the price gradually increased. It currently stands at just over $18,000. HODLer, someone who invested in March 2020, if he wants to get it or he can still wait, hoping that the value of Bitcoin will grow, he will enjoy the profit.
6. Choose a safe exchange currency in cryptocurrencies (digital currencies).
Try to choose the best option among many cryptocurrency exchanges. It is important to choose an exchange that has low fees and is safe. In particular, pay attention to the security of the converter you choose. Exchanges often know that they are victims of hackers.
The most famous exchange hack Mt. Gox exchange was hacked in 2014, resulting in the loss of 850,000 bitcoins worth $450 million at the time. In fact, the case of Mt. Gox is one of the biggest scandals in the history of cryptocurrencies. Therefore, it is very important to choose an exchange that has high security. eToro, for example, is a brokerage with a high security value through which you can invest in cryptocurrencies without any hesitation.
7. Understand hot and cold wallets
Therefore, as mentioned, cryptocurrencies (digital currencies) cannot be stored in a bank like traditional currencies. Cryptocurrencies are stored in so-called wallets. It is very important to understand the difference between hot and cold wallets. Hot wallets are connected to the internet. So they are online websites where you can store your cryptocurrencies.
The eToro wallet, for example, is an easy-to-use platform that supports more than 120 cryptocurrencies. Meanwhile, a cold wallet is hardware, usually in the form of a USB, where you can store your encrypted currencies. They stand out for more security as they are not connected to the internet. So they cannot be hacked.
8. Take privacy seriously
Obviously, there are definitely people you trust. But finally, when it comes to cryptocurrencies, be cautious and don’t trust everyone. It is best not to share your passwords or private keys with anyone. Especially private keys. No one but you should have access to them because private keys are the keys that protect your funds from theft.
9. Consider using a cryptocurrency trading robot
The cryptocurrency market operates 24 hours a day, 7 days a week. Therefore, the opportunities to benefit from investments in cryptography are huge. Therefore, as a welcome option, the use of automated trading software is known as trading robots. According to research by Cryptonomist, 86% of transactions are done by bots.
Trading robots work on their own and you can automate your investment strategy using them. For them saving investors time is very valuable because they operate even on weekends when you are hanging out with your family or hiking.
10. Don’t follow the crowd
Sometimes in cryptocurrencies there is an impression that everyone should invest in a certain period, you should do the same. This approach is wrong. You should stick to your plan most of the time. There are many “experts” trying to convince you which coin to invest in. Sometimes they can be right, but often they can be wrong.
If we go back, in 2017, during the crypto boom, the impression was created that everyone should invest. So those who did not know much about the situation bought while the price was high. It didn’t take long for the prices to drop and the buyers were disappointed. So, judge for yourself how the market is progressing and make your own decisions.
11. Understand correlation in cryptocurrencies
Crypto correlation means that cryptocurrencies are related to each other in such a way that their prices move in the same direction. For example, Bitcoin is related to Ethereum . Most altcoins are related to Bitcoin. So if the price of Bitcoin goes up, so does the price of altcoins.
But there are cases when the price of altcoin exceeds the increase in the price of Bitcoin by a greater percentage. Therefore, if you understand the connection between cryptocurrencies, your investment strategy will bring you more profit.
12. Be up-to-date
Anyway, it’s good to be up to date. Follow and read news, we mean cryptocurrency content. Often, various events in the world affect the price of digital currencies, so stay tuned to predict movements and prices as best as possible.
Read on to avoid cryptocurrency investing mistakes
Investors make many mistakes either due to lack of knowledge or due to emotions. Because of these mistakes, they leave a lot of money on the table. Below are some of the mistakes you should not make as a crypto investor.
1. Invest in only one coin
One of the most common mistakes cryptocurrency investors make is investing in just one coin. Although cryptocurrencies are related, some perform better than others. Bitcoin is undoubtedly the most popular cryptocurrency. But, in many cases it is precisely these new unknown digital currencies that can grow by 300-400% during the day, so it is very profitable. So, take your time, analyze the market and invest in more than one cryptocurrency. In fact, the chances of profit will be higher.
2. Invest all your money
They don’t want to say “invest only what you can afford to lose”. You should know that cryptocurrencies (digital currencies) can also disappoint you because their prices can crash depending on several factors. It should be kept in mind that cryptocurrencies are created by software that the human mind has created through coding. Naturally, their volatility is marked, which means that there are frequent price fluctuations. So, never invest all the money you have. Only invest in things you think you can afford to lose if their prices fall.
3. Avoid following invalid sources
Often, cryptocurrency investors get excited by following news and social media news. So they are affected by this news and create hype and invest at the wrong time or sell their coins at the wrong time. While it’s good to be up-to-date, it doesn’t mean that all news and forecasts are accurate. So you need to have a plan to follow and not get influenced by the hype around you.
4. Trading with emotions in cryptocurrencies
Emotions do not help traders at all. On the contrary, they only harm traders because they can make wrong decisions if they are influenced by emotions. In fact, emotions are one of the main reasons for the significant losses in cryptocurrencies that they may have experienced. Because they can buy or sell at the wrong time. So learn not to be swayed by emotions and stick to your plan.
After all, we are human and we get tired. When we are tired, we make more mistakes. So take a break from trading cryptocurrencies sometimes. Do not try to make many trades during the day, because trading is time consuming and it is difficult to get many good trades during the day. You should know that the more transactions you make, the more fees you will pay and the more tax obligations will arise.
Points and key points
- Cryptocurrencies are expanding as financial institutions are buying Bitcoin and offering crypto services.
- Bitcoin has the highest number of active addresses since 2017.
- Educate yourself and beware of scams when trading cryptocurrencies.
- Many investors fell victim to OneCoin, a Ponzi scheme directed by Bulgarian lady Roja Ignatova.
- If you get a profit, it is better to take it and not wait much longer.
- Gox lost 850,000 bitcoins worth $450 million to a hack in 2014.
- It is important not to share your passwords or private keys with anyone.
- It seems that non-validated coins are several times more profitable than valid coins.
- Only invest in what you can afford to lose.
- Get rid of your emotions.
We certainly hope these tips about cryptocurrencies will help you on your trading journey. If you like this article, give us a like and share it, in case someone else wants to benefit from it.