Common mistakes beginners make in crypto
Samuel is 23 years old and works at one of the top banks in the country. One day Samuel hears about how profitable cryptocurrencies are. He thinks to himself that this is the way out of poverty and into a life of Rolls Royce and lavish living.
He immediately invests in a laptop, purchases some crypto and begins trading. Unfortunately, a dip (when the price of crypto drops in value) smacks him in the face and he loses everything he’s invested, leaving him back to square one.
Samuel is distraught and confused. This was supposed to be his big break, how did it all go wrong?
This is a common occurrence in the crypto space and the trend doesn’t seem like it’ll end anytime soon. As crypto continues to increase in popularity, unprepared investors will continue to fall prey to the market itself.
Thankfully, with Breach, you don’t have to be one of them.
Here are some of the biggest mistakes newbies face as they invest in the crypto markets and how you can avoid them.
Don’t invest more than you can afford to lose
This is one of the oldest investment advice that many people fail to follow. Don’t put money that you need urgently or that you can’t afford to lose into crypto.
Crypto is very volatile and there are cases when a coin goes down by more than 80% within a few minutes — just imagine watching a $1000 investment reduce to $200.
Therefore you need to have a long-term mindset to avoid panic selling when the market turns red, which is a certainty. One strategy to prevent this is the dollar cost averaging where you dedicate a fixed amount or percentage of your funds to buy crypto — For example you can decide to buy $10 worth of bitcoin monthly.
Do your own research (DYOR)
Before you invest in a crypto project, it is best to do your research. A few minutes of research can save you a whole lot of money. Some of the ways to go about this include:
Reading primary sources such as the project’s website, whitepapers and checking if they have an active social media handle.
Looking up the founders to see if they have a questionable history or a glowing reputation working on successful projects.
Joining a crypto community to learn more about the project and to know more about how the market works. The Breach community is a great place to start your crypto journey.
Start with popular crypto projects everyone that wants to invest in crypto has probably heard about Bitcoin or Ethereum. This is because they’re the two most popular cryptocurrencies. <p>
Read our beginner guide to learn more on Ethereum.
Although established coins may not represent huge profits they are relatively safer than other cryptocurrencies. Therefore don’t jump into the latest crypto trend without doing your research.
Get educated on crypto
Finally, the best way to avoid losses in crypto is by understanding what you’re doing. The best place to start learning (you guessed it) is by reading our newsletters and blog posts on Crypto, NFTs, DeFi and more.
You can also listen to our podcasts and join the conversation on TwitterSpaces to get more knowledge on how crypto works.