Did you know that Bitcoin is the most popular form of cryptocurrency in the United States, with an estimated 25 million people owning Bitcoin units? There is undoubtedly a lot of hype that surrounds the world of cryptocurrency, and this hype often leads to interested investors jumping in before they have a strong understanding of their crypto investment strategy.
If you plan on investing large sums of your hard-earned cash into cryptocurrencies then it’s a good idea to invest time in learning the common crypto investor errors that many novices make. Learning from the mistakes of others will save you tons of time and money.
The good news is that you’ve found the perfect guide to help you along on your crypto investing journey. Keep reading this article to learn all about the ten biggest errors that you should avoid if you want to maximize your return on investment today!
Most Popular Forms of Cryptocurrency
The first thing that you’ll want to do before you start investing in cryptocurrency is to explore all of your options for cryptocurrencies. Bitcoin and Ethereum might get the majority of the attention but there are plenty of great options out there that are worth considering.
Bitcoin is the most popular, and it has a market value of just under $20,000 as of October 2022. Bitcoin is what ultimately led cryptocurrencies into the public eye as an asset worth investing in.
Ethereum is another popular option that many people consider investing in. One thing that sets it apart from other cryptocurrencies is the fact that it’s required to continue building the blockchain with Ethereum. This technology makes it easy to create and implement smart contracts.
You also can’t go wrong with investing in Tether if you’re new to cryptocurrencies. Tether is a stablecoin, which means that it’s tied to the value of the United States Dollar. It’s a great option if you need to find a medium for trading one form of crypto for another.
If you plan on using a crypto exchange then it’s worth considering investing in BNB. This form of crypto is issued by Binance, which is one of the largest crypto exchanges in action.
Common Crypto Investor Errors to Avoid
Now that you have a better feel for some of the best forms of crypto to invest in, it’s a good idea to learn about the mistakes that many beginners have made before you. It’s easy to feel your adrenaline pumping and to picture the riches that you could make with. a good crypto investment strategy.
The reality is that you need to do a lot of research into the crypto market and the safety measures that you should take for your crypto assets. Here’s a closer look at the mistakes that you should avoid at all costs.
1. Lack of Crypto Knowledge
Odds are that you’ve heard about the fortunes that investors have made from buying and trading cryptocurrencies like Bitcoin, Litecoin, and Ethereum. The hype is palpable, but the people making these fortunes did so because they were able to understand the asset they’re investing in.
You need to prepare yourself to do plenty of research into the crypto market if you want to earn a tidy return on investment. You’re asking for trouble if you start investing and trading Bitcoin with no background knowledge of how the crypto market works.
It’s much easier to form a good investment strategy if you know how cryptocurrencies work. A great way to start your speculation is to find different crypto projects that are in the works. You can gauge a cryptocurrency’s future value based on these projects and their success.
2. Order Errors
One of the easiest investor errors to avoid when you start purchasing crypto is the order error. If you plan on using a Bitcoin ATM like those at bytefederal.com then you’ll need to know your digital wallet’s address.
A good crypto exchange platform will make it easy to process purchases and sales. Unfortunately, not all crypto exchange platforms are made the same, so you might encounter one that is clunky and difficult to navigate.
It’s not difficult to get confused by the order forms that you’ll need to use when you want to generate crypto investment profits. The real issue is the errors that happen due to these exchanges. A simple mistake like putting a decimal point in the wrong spot could end up costing you thousands of dollars.
The best approach is to always double-check and triple-check your orders before entering them. There’s no going back if you make a mistake with your crypto order, so make sure that it’s right the first time.
3. Complicated Trading Strategy
The biggest problem with the internet in the crypto trading world is the sheer amount of advice that is out there from people that you don’t know. It’s best to start slow with your crypto trading career rather than trying a complicated trading strategy that you learned from some person on TikTok.
Following these strategies is a bad idea because they’re not tailored to help you achieve your goals and they might not fit your financial situation. You’re setting yourself up to lose thousands of dollars by taking this route rather than educating yourself and creating the perfect crypto investment strategy for you.
Look into the technical side of the crypto market to come up with a strong strategy. You don’t need to complicate things in order to have a strong return on investment.
4. Using Leverage
Leverage is a great tool to have in your toolbox when you use it right, but it’s not the best fit for investing in crypto. This is especially true if you’re new to investing and trading on the crypto market. It’s easy to get blown away by stories of people going from the outhouse to the penthouse by investing in Bitcoin, but using leverage carries a ton of risk.
The biggest issue that new crypto investors run into with leverage is the fact that you need to put up your assets as collateral upfront. If something goes wrong with the crypto transaction then you’ll find yourself in a situation where you’re out all of your money.
Yes, leverage opens the door for you to multiply your return on investment. It’s also important to remember that trading crypto is a zero-sum game. There is always a winner and a loser, which means that you’re just as likely to lose everything if you start trading with leverage.
5. Using the Wrong Wallet Address
Another big crypto investment mistake that is easy to avoid is using the wrong wallet address. If you plan on using a Bitcoin ATM for your crypto transactions then you’ll want to make sure that you’re entering the right wallet address.
Each digital wallet has an address that allows the crypto trading platform or crypto ATM to route the crypto to your wallet after the transaction goes through. The problem starts when you realize that crypto is unregulated by any government or bank.
If you send your crypto to the wrong wallet address you’ll find that you’re SOL. That crypto that you just spend thousands of dollars on is gone with the wind as far as your investment portfolio is concerned.
Always double-check your wallet address before you submit a transaction of any kind. It’s not worth the risk, and taking this extra step will only cost you a few more seconds of your life. It’s a small price to pay for a small fortune in crypto.
6. Getting Scammed
As with any industry where large sums of money are involved, you need to keep a close eye out for scammers that are trying to get access to your crypto. It’s no secret that the crypto market is chock full of scammers, and they’re willing to use a variety of tactics to steal from you.
In fact, more than $1 billion in cryptocurrencies was lost to scammers between January 2021 and March 2022. It’s a very real threat, and you don’t want to lose all of your hard-earned money so it’s important that you remain vigilant at all times.
The scammers will use complicated and seemingly legitimate tactics like phishing to get access to your wallet’s address and keys. Once they have that information, it’s only a matter of time before they transfer your coins to their own wallets.
You should also avoid talking with anyone that you don’t know through instant messaging apps. The biggest ways that scammers will get you are through email and instant messages. All it takes is connecting your wallet with an app that someone recommends and giving that app access to your wallet’s coins.
It’s smart because it’s a common part of using crypto trading apps. Always research apps before you grant them access to your digital wallet.
7. Ignoring Fees
People hate the idea of paying minuscule fees for using a traditional ATM, and these fees are nothing compared to the fees you’ll face through crypto ATMs and exchanges. You need to account for these fees when you make a large transaction, as they’ll add up in a hurry.
You need to have a strong grasp of how gas fees work if you plan on investing in crypto. These fees total as high as 3 percent of the total transaction amount. It might not seem like much, but if you purchase $20,000 in crypto you’ll face a transaction fee of $800.
It won’t take long for massive transaction fees to start cutting into your return on investment. This gets even worse if your investments don’t hit, as your smaller profit margin gets overtaken by the transaction fees that you’re paying.
8. Short-Term Mindset
Many new crypto investors make the mistake of going into crypto trading with a short-term mindset since they see Bitcoin and other currencies as a way to get rich in a hurry. It’s one of the worst common crypto investor errors to think that you’ll rack up a huge return on investment in a hurry.
Going into crypto trading with that mindset is much likelier to result in you losing all of the money that you’re investing. A long-term mindset will help you do a better job of identifying safe investments that will increase your odds of investing success.
9. Using Hot Crypto Wallets
It’s also important to learn that there are two different types of crypto wallets that you can use when you start investing. Hot wallets are great if you’re in need of quick access to your cryptocurrencies since they’re connected to the internet. You’re a few buttons away from trading, transferring, or selling your coins.
That convenience brings the risk that hackers can access your wallet and take your coins. It’s a risk that isn’t worth taking, especially when thousands of dollars are on the line.
Cold wallets allow you to store your coins in an offline wallet. It offers a much higher degree of safety for your coins since they’re more difficult to access.
10. Forgetting Your Wallet Password
A shocking number of crypto investors have lost everything because they couldn’t remember the password to their digital wallets. If you forget your password then odds are that your crypto will never get recovered from your wallet.
The best approach to take is to write down your crypto wallet password and keep it in a secure location. If you ever find that you can’t remember your password then you’ll have your backup plan so that you can still access all of your investments.
Start Avoiding These Common Crypto Investor Errors Today
Investing in cryptocurrencies offers another asset class that you can add to your portfolio and build a return on investment through. That said, you need to avoid common crypto investor errors like forgetting your wallet’s address or password.
It’s also vital that you remain vigilant about the threat of hackers and crypto thieves gaining access to your wallet, especially if you choose to use a hot wallet. Most of all, take the time to come up with a crypto investment strategy with careful investments based on your knowledge of the market.
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