One in six Americans say they’ve used, invested in, or traded cryptocurrency. And for the others, not knowing how to might be at the root of their hesitation.
Not knowing the ins and outs of investing with cryptocurrencies can lead to some risky mistakes.
Read on for five errors with crypto investing you should avoid, whether you’re a beginner or not.
1. Not Having a Strategy
Cryptocurrency is easily available, and there are few barriers to investing in it. But that can lead to impulsive investments made with no strategy in mind.
It’s important to have a crypto investment strategy, including an exit strategy. Know your investment goals, and only choose cryptocurrencies that align with those targets.
Then, check in on your portfolio regularly, and make changes or pull out of investments that no longer work for you.
2. Following the Crowd
Crypto investing is still relatively new, and a lot of advice is based on casual hearsay or content made by amateurs.
It can be easy to trust what you hear and jump on the latest crypto bandwagon. But a lot of advice floating around is either completely subjective or based on paid deals with certain cryptocurrencies. In other words, take everything you hear with a grain of salt.
Be sure to do your own research into different types of crypto, how they’re mined, and what benefits they offer. Read more on eco-friendly Bitcoin mining in this article.
3. Sticking to One Type
After you’ve learned about different types of cryptocurrencies, choose around three to invest in.
Many people stick to only one, staying loyal to the crypto they think is the strongest. But the investment risks and rewards of each currency can be hard to predict, and diversifying your portfolio can increase your chances of earning a profit.
When choosing which to invest in, try having at least one stablecoin option and two cryptocoins.
4. Being Cheap
The investment that requires the least amount of money in the beginning may seem like the safest choice, especially if that investment grows later. But buying cheap cryptocurrencies is one of the most common cryptocurrency mistakes.
While it’s always important to consider your return on investment and get the most bang for your buck, many extremely cheap cryptocurrencies only get cheaper over time. Then, your investment, no matter how small it was, will be completely worthless.
Avoid investing in crypto just because you found a cheap option, and stick to those that show signs of growth.
5. Overlooking Scams
The world of cryptocurrency is getting safer, but there are still scams and frauds to be aware of.
Cryptocurrency hacks aren’t unusual, and fake giveaways and other scams only aim to steal your cryptocurrency or personal information.
Always do your research before accepting any investment, and make sure to keep your wallet security details and keys secret.
Avoid These Errors With Crypto Investing
As cryptocurrency becomes more commonplace, investment mistakes become more common too.
Avoid these errors with crypto investing to minimize your risk and protect your earnings.
For more on investing and earning money safely, check out our latest business articles!