Nothing defines the cryptocurrency industry better than the phrase “money attracts money.” If you know which digital currencies to invest in, you have a high chance of taking massive profits. Currently, the crypto space has over 100 million active crypto investors in India alone, and this figure is multiplied on a global level. But as the craze for investing in cryptocurrency in India is soaring, many crypto enthusiasts are flocking to start their crypto journey. But they all are making common mistakes hurting their investment profile.
Whether you’re a beginner or have been into crypto trading for some time, there are some things that you should be cautious of. Since governments worldwide are yet to frame regulations for the crypto industry, you don’t have anything to rely on if things go south. To help you steer clear of possible losses, we’ve curated an epic guide that lists down all the things you should be mindful of during crypto trading. So let’s quickly dive into the points shared below.
Don’t Invest Based on FOMO
Social media is currently filled with celebrities promoting random cryptocurrencies. Meme coins can be the best example. You can come across various people on different social media platforms, including blue tick verified handles, asking to invest in Dogecoin, Shiba Inu, etc., without truly understanding these cryptocurrencies. If you want to save money from unfruitful investments, we suggest avoiding investing based on FOMO.
Not all investors have the same investment goals; hence, falling into someone’s advice blindly can turn disastrous. Always conduct your own research to find out whether investing in particular cryptocurrencies can give you profits in the future or not. Always resist going with the social media flow.
Never Try to Mimic Someone’s Portfolio
Since some investors have the habit of sharing positive gains online, it may tempt some people to mimic the same investment to receive gain. But the profits shared online are often the half picture. If you don’t know the investor personally or they are reluctant to share more details about their winning assets, you should avoid it. You don’t know when the person invested in the particular cryptocurrencies. Even the investment and ownership duration remains unknown. In such cases, when you try to replicate the same investment with half knowledge, you’re sure to make mistakes and lose money.
Be Cautious of Suspicious ICOs
For the uninitiated, ICOs refer to Initial Coin Offering (ICO). They are like the IPO, but for the cryptocurrency world. During the ICO, a company mints the first bulk batch for public distribution against a particular price. One of the most significant drawbacks of ICOs is they don’t possess any reliable history. They tend to attract investors with their huge visions.
In the past, there were instances wherein random companies announced ICOs and made unrealistic claims. People that fell for it ended up losing all their invested money because the company vanished from the market after the ICO market. To ensure you don’t fall for such scams in the future, never put your money in ICOs that look suspicious or too good to be true. To ensure you’re safe, you can continue investing in cryptocurrencies like Bitcoin that have been around for years. You can easily find an exhaustive how to buy Bitcoin guide online, and begin your trading journey.
Gain a Better Understanding of Your Risk Appetite
The entire game depends on your risk appetite. Be it Bitcoin or any other altcoin; cryptocurrency investment is always risky and volatile. If a digital currency has been performing pretty stable over the recent years, it doesn’t mean it won’t experience a dip in the future. If you want to invest safely, we suggest investing an amount you’re comfortable losing.
Many investors made the mistake of investing their life savings in cryptocurrencies recommended by their following influencers. And the result was predictable. Even experts suggest investors always assess their risk appetite before investing in any cryptocurrency. If you take this suggestion seriously, you can save yourself from huge potential losses.
Buying Dips Isn’t Always Fruitful
Many online gurus have been called out for giving inappropriate pieces of advice to their followers. And buying dips is one of them. As an investor, you must understand that not every dip is worth capitalizing on. At times, a cryptocurrency’s price may be following because it doesn’t provide any real-world utility, and it isn’t relevant for the market. You’re inviting financial misery if you invest in such cryptocurrencies just because their price has hit an all-time low.
Buy What You Truly Understand & Believe In
Investing in cryptocurrencies isn’t for everyone. While this relatively new asset class has made many millionaires in a relatively short term, it has also stripped many of their life savings. If you don’t want to experience the extreme effects of investing in the wrong cryptocurrency, we’d suggest following all the points mentioned above. They will help you avoid any potential pitfalls that can make you lose money.
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