With Bitcoin, Ethereum, and countless other cryptocurrencies hitting all-time highs, as well as considerable surges in prices across the board, it comes as no surprise that more and more people are interested in investing.
Prices have given up a few gains from December 2017 and some additional volatility; still, crypto remains a hot topic. With all that being said, the cryptocurrency world can be pretty tricky to navigate for beginners who may be interested in dipping their toes into the water.
1. Following One-Sided Opinions
A lot of investors put too much stock into the advice of others. It’s easy to get caught up in the hype, especially when the general population is interested in the same asset.
Advice comes from many angles, and while some of it is worthwhile, some of it is not. It’s essential to do your own homework and make your own decisions. Be sure to do your research and not just take one person’s advice.
2. Not Understanding the Entire Market
No matter how good it sounds, any investment is best evaluated as a part of a more extensive portfolio. The crypto market is complex, with thousands of coins accepted by thousands of vendors.
A few bad decisions can quickly wipe out your entire investment. We’re seeing this now with the recent flash crash on the Binance exchange. If you aren’t looking at the big picture, then you’re probably better off sitting out.
3. Making Assumptions Based on the Price
Many people look to the price of a cryptocurrency as a sign of its future potential. However, this is a mistake as blockchain has many applications, many of which we have yet to discover fully.
Price does not always indicate potential. Many projects have great potential but are still in the early stages, a very early period for crypto.
4. Not Doing Your Own Research
The majority of cryptocurrencies are built to solve specific problems, though many are experiments of various sorts. The values of these cryptocurrencies are directly related to their ideas and the future success of their applications.
It’s up to you to do your own research and make up your own mind about which ones are worth investing in. Don’t pay too much attention to what others say, and look at the facts to decide on your own.
5. Not Diversifying Your Portfolio
Because we haven’t seen a crypto crash of this magnitude before, many people are not diversifying their portfolios. Others put all of their eggs in one basket and then take on many risks.
Remember that cryptocurrencies aren’t always speculative: some allow you to store value, such as Bitcoin, while others have actual utility, such as Litecoin. Diversifying your portfolio is always the best move for any investor, even if you’re not a novice.
If you’re a long-term investor, you know what it’s like to make mistakes in this field. The crypto market is much less forgiving than others, so errors are harder to recover from. Make sure to think before you invest.
Brawler’s Guide is a resource hub for big thinkers and big doers. We create content for ambitious upstarts, helping them traverse the complex and often challenging investing world. If you’re an ambitious upstart, an entrepreneur with a dream, someone who is taking the steps that so few people do, then you’ve come to the right place! For more about cryptocurrency investing, check out our website now!