Crypto Investing Mistakes To Avoid

Whether you are someone contemplating your move into crypto or a novice who just started investing, this blog is for you. You are going to be making a lot of mistakes during your initial days of investing. 

“But remember, Mistakes have the power to turn you into something better than you were before.”  -Anonymous

Making mistakes is okay because they help you become better at what you do. But what’s not okay is repeating them. So here is a list of all the basic mistakes one should avoid while figuring their way through the crypto world. You might have made some of them, but this is your reminder to learn from those mistakes and not repeat them in future.

7 Crypto Investing Mistakes You ‘MUST’ Avoid

Here are seven most basic investing mistakes to avoid, take notes because the learnings from here can come a long way in your investment journey.

1. Buying at an All-Time-High (ATH)

We have all been here. You see a cryptocurrency rally and get excited by the gains other people are making with it. You jump in hoping for similar returns, but now the cryptocurrency starts to come down, and you are stuck.

Generally, when a project is pumping, retail investors are the last to know. And as soon as the retail crowd buys in, early investors start looking for cashing out opportunities, causing a fall in prices. It is already overpriced by the time you put money into it and profiting from this can be often difficult.

For example, during the dogecoin rally of 2021, many people bought the cryptocurrency at its peak and have not been able to recover since then.

Source – Coinmarketcap.com

So don’t let the greed propel your buying decisions in a price rally. Only invest if you think that a crypto is fundamentally strong. Here is your guide to help you analyse cryptocurrencies.

2. Not enough diversification

People often confuse diversification with simply distributing all your capital across multiple cryptocurrencies. However, what’s often overlooked here is that you need to be mindful while doing so.

For instance – Diversification isn’t just investing in multiple crypto assets. But investing in crypto assets solving varying problems. For instance, don’t just invest in multiple Metaverse tokens and say you have a diversified portfolio. But ensure that you have NFT, DeFi and other crypto assets as well.

That said, don’t YOLO all your money in crypto. Look at it as a part of your larger investment portfolio. Diversify beyond crypto, in traditional asset classes like stocks, mutual funds etc. Cryptocurrencies are very volatile and maintaining a good diversification mix help balance its risk.

3. Never too early to invest

This is especially for the folks in their early 20s. Don’t think that because you are early in the game, you can go all in on trading and come back to investing when it is time to be serious.

Not saying you shouldn’t trade at all but trade responsibly. How? Set aside some part of your capital to be put towards your long-term investments and trade with the rest. Trust us, your future self will thank you and the power of compounding will bless you. 

Just think about it, what is the likelihood of you making bank in trading? Almost negligible. But with investing, you have some level of assurance that volatility won’t bring your portfolio down to zero.

4. Panic selling

It is hard to resist the urge of selling your cryptos and getting out in a bear market. It takes courage to hold on to your investments when they are in red. But hey! these are the times that you do your research for.

If you have done your homework and believe in your investments, then stay strong. The bear market shall pass and all the robust projects will thrive. Don’t fear the bearish market sentiment and make hasty decisions because the last thing you want to do is sell in loss and see the same crypto bounce back once the market recovers.

5. Crypto scams, beware!

Do you get those messages on Telegram, and Discord channels that propose the most amazing investment plan for your investments? Never ever respond to them!

Many amateur investors fall for scams where a scammer promises them exorbitant returns in exchange for some cryptos in the name of investment. But we all know what happens once you transfer the cryptos, you never hear back from them.

Please know that the only way to invest in cryptos is through a trusted crypto platform that lets you buy and sell cryptocurrencies. They will never promise you any returns because it is subjected to market performance.

6. Buying a crypto because it’s cheap

Many a times people buy a crypto just because it is cheap. There is no rationale behind it. They think that they can get a lot of tokens for a very small sum so why not.

But what they don’t think about is, what will you do with it if that token is not even worth the money that you paid for it? It could turn out to be a scam and you may lose the money you invested.

Don’t run behind how many tokens you have, what matters is the kind of tokens you have. And the beauty of crypto is that you can buy even the smallest portion of it with as low as $5 or ₹100 on Mudrex.

7. Looking for the next ‘to the moon’ crypto

This can be an extension of the above point. 

Don’t get us wrong, there is nothing wrong with scouting for the next multi-bagger. It would be great if you found one. But the problem is when one doesn’t understand that finding one multi-bagger means getting rekt by a thousand shitcoins before that. If you can’t take those hits, maybe you shouldn’t try hunting for such cryptos.

If you are a novice investor then you may want to avoid this. It is for those who don’t mind losing their capital in the hope of finding a multi-bagger.

That was it! We hope this blog helped you understand what ‘not to do’ while venturing into the crypto world. Do tell us if you have made any of these mistakes on our Twitter (@officialmudrex) for a chance to be featured.           

Keep Learning, Keep Growing!

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