4 Common Crypto Investment Errors and How to Avoid Them

Are you ready to invest in crypto? With over 300 million people currently investing in this multi-billion dollar market, it’s time to make your money go to work for you.

Not every investment in cryptocurrencies will make you an instant millionaire, however. There are many mistakes investors make that negatively impact their portfolios.

Do you want to avoid some common crypto investment errors? We’ve got you covered in this guide!

1. Not Researching the Different Types of Crypto

Many people don’t research their investments before buying, whether it’s stock, real estate, or crypto. Investment in cryptocurrencies is even more diverse than stocks or properties.

Not every crypto works the same way. Unlike other monetary forms, crypto has no standard-issue or central authority. Every crypto is free to decide its issue and regulation.

For example, Bitcoin is very different from Ether, despite currently being the top two crypto investments. Coin cryptos are also very different from crypto tokens.

A guide to NFTs and altcoins will help you understand the different applications and issuance of each crypto type. You’ll be able to sort the crypto knowledge from the hype and speculation.

2. Buying High and Selling Low

This is another common investment mistake across all types of investing. Some investors have an intellectual understanding of investment risks and rewards, but their investment strategy is still based on emotion.

As an investment’s value shoots up, excited investors hop on the bandwagon hoping to grab some earnings while they’re hot. The psychology behind this mistake is referred to as FOMO, or Fear Of Missing Out.

But investments don’t climb forever. When the investment performance inevitably goes back down, disappointed people sell their stock low.

Investor guides caution against these FOMO-based decisions. It’s one of the worst emotion-based investment strategies to have and all but guarantees you’ll lose money.

3. Buying, Trading, and Selling Without a Strategy

Every investor starts out with the same basic goal: make a return on investment. But not every investor tries to meet this goal with an actual investment strategy.

A crypto investment strategy follows the same basic principles as other investments:

• Evaluate the risks
• Don’t invest money you can’t afford to lose
• Make short-term and long-term goals
• Have a well-balanced portfolio

Many common investment strategies include:

• Buy-and-hold investing
• Dollar-cost investing
• Active investing
• Momentum investing 
• Value investing
• Growth investing
• Income investing

There are many investment guides from sites like NerdWallet, Investopedia, and SmartAsset to help you decide which strategy works best for you.

4. Neglecting Investment Security

Crypto is a virtual currency that’s more private and less regulated than other currency forms. This gives cybercriminals new opportunities.

Your money and crypto investment profits can be attacked through:

• Ransomware
• Hacked or fraudulent trading sites
• Cryptojacking
• Phishing for pins and passcodes
• Digital wallet theft

Like any other currency, it’s important to safeguard your investment in cryptocurrencies against theft and social engineering.

Avoiding Common Crypto Investment Errors For Higher Profits

Now that you know some common crypto investment errors to avoid, you can start your investment journey with confidence!

For more guides like this one, check out our tips and tricks section. Or read more articles in our hacks section!

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