Are you looking to get in on the times and invest in cryptocurrency? Do you see the value in reinvesting your money into the currency of the future? If so, then you need to learn about the top cryptocurrency investing mistakes to avoid.
Far too many people invest in it blindly. They merely hear about a type of cryptocurrency, invest in it without any knowledge of it, then are forced to deal with the consequences.
See below for a guide listing the top mistakes that you should avoid making when investing in crypto and why they can be so catastrophic to your financial situation.
Did you know that there are over 10,000 types of cryptocurrency out there on the market right now? That number will only continue to increase as the months and years go on. Everyone wants to create the next hot source of crypto.
That leaves beginning investors at a huge risk. With so many different types of crypto out there, it's easy to get confused.
As we touched on in the intro, far too many people invest their hard-earned money into a form of cryptocurrency without ever learning about it. Maybe they were referred to it by a friend. Perhaps they heard a celebrity pushing it.
Very rarely does that pay off? Not every form of crypto has a Dogecoin experience where a person with a high platform pushes it and it skyrockets "to the moon". More often than not, that will leave you with a loss.
Instead, you need to do your homework on any form of crypto that you're considering investing in. This can give you more confidence. Make sure to learn about the person/company that developed that type of crypto. How much supply is there? Is it going to continue to grow? What's the price currently at? These are all questions you should be asking yourself.
If this is your first time investing in cryptocurrency, then you're to be commended! You've seen the value in investing and have your eyes set on the future. That's fantastic!
However, you need to understand the nature of cryptocurrency. You may have heard the term "volatility" before... well, crypto—by nature—is extremely volatile. That means that its price goes up and down faster than you can say "bitcoin".
Whenever you invest in cryptocurrency, you have to be willing to play the long game. Even in the case of Dogecoin, which has seen a gigantic surge, investors are still being encouraged to hold their supply rather than selling it. Whether or not they do is completely up to them!
Don't panic if you buy into a cryptocurrency at one price, then automatically see the price plummet a bit. We promise that it will more than likely jump right back up. Those tiny hills and valleys might seem significant now, but over the span of a few months or a year, they will prove to be minute.
Do your research, then invest in a form of crypto and be ready to play the long game. That's where you will see the biggest return! If you plan to invest in Monero (XMR), be sure to have it secured with a private Monero Wallet or any compatible crypto wallet that ensures confidentiality and security.
If you've spent a fair bit of time investing in stocks, then you should know better than to pour all your money into one form of crypto. Just like a stock, doing so can cost you dearly.
Like we just mentioned, cryptocurrency is extremely volatile. Prices rise and fall quickly. There is always the potential that a crypto's value will plummet and never return to form, resulting in a loss for those that bought it at a higher price.
If that currency is only 1 of 3, 4, or 5 types of crypto that you've invested in, then it won't be as big of a hit to your portfolio.
We recommend that you diversify your portfolio as much as possible. Consider investing in CEO, Bitcoin, Litecoin, or Ethereum. You can click here to buy ethereum if you're interested!
Listen, folks. Fear of missing out is never a good reason to invest. Whether it's in stocks, bonds, or crypto, letting FOMO dictate your next move will almost always lead to negative results.
That's like being the last one to hear about an 80-percent-off sale at Wal-Mart. By the time you get to the store, the shelves will be empty. In this case, the crypto's value will be on the decline, leading to a loss.
Again, let research be your guide. The more you learn about the different types of crypto, the more of an educated investment you can make.
This is probably the number one factor that beginners don't realize about investing in cryptocurrency. Remember when TurboTax asked you if you'd invested in crypto the past year? This is why: there are taxes attached to it.
In the United States, you are paying capital gains tax for every transaction you have involving cryptocurrency. The more trading that you do, the more taxes you'll pay, thus the less money you'll get in profits.
That's why it's—once again—important to do the research and prepare to invest for the long haul. You'll pay fewer taxes and receive more profits as your crypto grows.
Now that you have seen some of the most common cryptocurrency investing mistakes to avoid, be sure to use them to your advantage.
Build a strategy. Do the research. Find knowledgeable people that you can go to for direction on which crypto you should be investing in and why. Knowledge is power. Be sure to also check this site finscreener, for knowing more about stock screener for investors and traders.
Be sure to browse our website for more articles on cryptocurrency, as well as many other topics that you will enjoy reading about.