There are several common mistakes which the novice cryptocurrency investor should take note of before investing in crypto. Let’s dive into the most common pitfalls new investors make.
Avoid these common pitfalls in crypto investing
As an investor, you need to know and understand what the coin resembles as well as develop a good understanding of its trading history. Should you be interested in buying Bitcoin, firstly understand what Bitcoin is before you buy or sell Bitcoin as it is not the same as trading gold, silver or shares on an index. Invest the time to build an understanding of the cryptocurrency landscape and eco-system before you go on an extravagant buying spree. Invest only as much as what you can afford to lose.
Starting out in cryptocurrency
At the onset of your journey in crypto investing you should try and understand all the fees which are involved in a trade. Standard to any trade you should consider the fees which are associated with deposits, withdrawals and trading fees. It is advisable to do an end to end investment and disinvestment analysis with a small bit of money before you go all in.
Before you do complete the actual investment identify the best exchange which is able to take your fiat funds, which has the lowest fees and offer trade pairs(BTC and ETH) on the coin you are seeking to invest in. It is important to know where to buy and sell the crypto and know that the exchange has the liquidity e.g. volumes (supply and demand) for the coin you are trading in.
Securely storing your crypto assets is of the essence once you have purchased your holdings. It is advisable not to store your crypto on an exchange. Exchange hacks are, unfortunately, still a widespread occurrence in the crypto asset markets. Some of the most prominent global exchanges have been prone to attacks. There are a wide array of digital wallets available and it is important to store your holdings on a secure wallet.
Beware of scams
Beware of scams asking you to send them BTC or share your wallet key via an untrusted source. There are several scams which will exploit the hype around Bitcoin and users are drawn into “limited time to invest” into a project or receive a 10% discount for an investment, and lastly, don’t send your funds over to anyone offering high returns.
Avoid greed and take profits in a timely fashion as cryptocurrencies are volatile. Prices are volatile, people get scared and sell assets when prices plummet and get FOMO (fear of missing out) and purchase when prices surge.
Lastly, ensure that you beseech your crypto assets and the wallet keys in your will to your beneficiaries as part of your estate planning.
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