Coinbase currently has more than 50 million registered users. What does that tell you? Cryptocurrency is something that can no longer be ignored.
Although there are still sharp divisions in terms of opinion, the truth is that Bitcoin and other cryptocurrencies are here to stay. On one hand, there are those who see crypto as the future of money while others see it as a bubble that’s waiting to burst.
Whichever the case, cryptocurrencies have in the past few years seen a significant rise both in terms of value and popularity.
This is probably the reason why many people are turning to Bitcoin and other cryptocurrencies as a form of investment. If you are just getting started with crypto, it is important to know how it works and the risks involved.
Here are the top 5 cryptocurrency investing mistakes to avoid:
1. When the price is low, it doesn’t mean the cryptocurrency is cheap
This is one common mistake that people make when investing in cryptocurrencies. Some tend to be misled by the price of various cryptocurrencies and end up either purchasing a lot of them or avoiding them at all. What they don’t realize is that cryptocurrencies are highly volatile. This means that prices can rise and fall within a very short time.
However, the real value of each cryptocurrency is not necessarily determined by the price it is being sold at exchanges. There are several factors that always come in.
2. Buying on speculation
Buying on speculation is the work mistake you can make as a beginner investor in cryptocurrency. Unfortunately, most people keep repeating this mistake because they are driven by the desire to make quick money. They don’t take time to analyze the future prospects of a cryptocurrency before investing their money in them.
3. Forgetting your risk tolerance
The golden rule of investing is not to invest in what you don’t expect to lose. It is important to note that any form of investment involves both chances of winning and losing.
Nonetheless, you can mitigate losses by properly apportioning investments vis-à -vis their level of risk tolerance. It would be a bad idea to pull out all your money from one investment and use it to purchase a cryptocurrency you don’t understand.
4. Putting all your eggs in one basket
This is one of the major mistakes that most newbie investors make. Just like any other investment, different cryptocurrencies have their own risk levels. It is difficult to bank all your hopes on single crypto and think that you are safe. The best thing is to spread your money across different cryptocurrencies.
5. Have an exit strategy before buying
Purchasing any digital currency without a proper exit strategy can be disastrous. The only way to be safe is to ensure that you have stop losses in place. There also ought to be a mental framework that can be used to attain your core objectives.
In general, a guide to trading cryptocurrency from reliable places like Capital.com is important for new investors. It will help them avoid common mistakes that can cost them a lot of money.
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