5 Crypto Investment Mistakes We Should Never Make
Cryptocurrency investment is something that is growing in popularity among mainstream investors on account of its ability to act as a hedge against stock market volatility. Despite this, cryptocurrency investing, like any other kind of investment, requires that you study and understand the market before taking the plunge. This will prevent you from making the mistakes that many people make when investing in them. Let us look at what the five primary ones are.
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Overconfidence
You might be among the few who actually understand cryptocurrency and know how it functions. For example, you may know that you can buy bitcoin with paypal, and all such minute details about cryptocurrency investment, but it would serve you well to not rush into any kind of rash commitment as reported online.
Obtaining a deep understanding of blockchain technology and Bitcoin takes skill and you would do well to bide your time, and consult people who are recognised industry experts, before proceeding with cryptocurrency investment. It is essential that you learn about crypto wallets, crypto exchanges, private and public keys. Furthermore, there are other aspects pertaining to the fees that you might have to pay to the exchange, and any tax liability that might arise.
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Over Investing
If in a rush of exuberance you rush in to carry out a large number of trades in a single day, you will not only pay more by way of exchange fee, you will probably end up with losses. This would likely lead you to trade some more to recover the losses, in the process making you lose more and more money. Thus, it would make eminent sense to bide your time and invest prudently in any type of cryptocurrency. Profits and losses should be taken calmly. BTC investments is a high-risk game, and certainly not a get rich quick scheme.
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Treating Cryptocurrencies as Shares
While crypto might be becoming mainstream, but cryptocurrency trading is still quite different from trading in shares. You for one don’t get any part ownership in the company whose cryptocurrency you are buying, nor do you receive any dividend. In fact, there may not even be a correlation between a cryptocurrency company doing well and the value of their currency. Therefore, it makes sense to devise a unique investment strategy that best suits cryptocurrency investment.
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Don’t Go After Cheap Cryptocurrency
A lot of people seem to erroneously believe that buying cheap cryptocurrency is the way to untold riches. This is a patently false assumption . The principal factors that impact growth in the value of a cryptocurrency are its extent of supply and the real value of the coin in question. Its low price has got nothing to do with it whatsoever.
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You are Unaware of Cryptocurrency Market Dynamics
There is a difference between taking your cues from the media and having actual knowledge about cryptocurrency market dynamics. For instance, Bitcoin constitutes 50% of the market liquidity of the cryptocurrency industry. Apart from it there are thousands of altcoins that impact Bitcoin and vice versa. If you can’t fathom how this interplay happens, you are not going to be able to take the right investment calls.
Conclusion
Cryptocurrency has taken some time to be understood and appreciated by the mainstream. That being stated, cryptocurrency investment can be a profitable investment platform if you understand its principles well. By avoiding mistakes, like the ones described above, you can steer clear of making losses.
What works for cryptocurrency is the fact that it is more than just digital money or a mere investment opportunity. Its increasing adoption by mainstream industry, in diverse ways of transactions, are slowly but surely making it change the very paradigm of how the world of finance will conduct itself in the years ahead. Being associated with something like this can augur very well for the future. In the meantime, you would do well to keep your guard up.
