Recently, we’ve seen a rise in cryptocurrency as overwhelming gains attract swarms of investors. From January 2017 to December 2017, the world of cryptocurrency exploded after Bitcoin’s price rose up to 2000%. With numbers like that, it’s easy to see why so many people are looking to enter the market right now.
Of course, not everyone can benefit the way they’d expect. Some may even make mistakes that result in their hard-earned money being flushed down the drain. Before investing, it’s important to know about things like market conditions, company history, and coin fluctuation. To make the process easier, we’ve compiled a list of mistakes you should never make in the crypto market.
Mistakes You Should Never Make in the Crypto Market
Not Doing Enough Research
This is one mistake that every financial advisor will underline. Addressing the fact that many crypto investors are newbies, people tend to fall for the of lies of shills (fake people who pretend to be experts) that they meet on the internet. Shills are generally paid promoters or fake accounts biased for a particular coin/token.
Hypnotized by glossy words, newcomers often forget to do their own research. It’s important to remember that, at the end of the day, it’s your hard-earned money on the line and you’re 100% responsible for it. Therefore, before placing bets on any coin/token, you must do a detailed research of stats, facts, company, and price. If you don’t understand how a coin moves and processes, it’s not advisable to invest in it.
Ignoring Basic Fundamental Charts
On the surface, charts and graphs may seem complicated for beginners to follow. While they be tedious to read, these charts can potentially help save you from a serious downfall. The market fluctuates often, and no one can accurately predict what will happen from one day to the next. However, if you follow the graphs and charts, it becomes easier to make market predictions.
For example, the current price graph shows a trend quite similar to events from 2013. Back then, Bitcoin had come out of a bubble in 2011 before stabilizing. This was followed by the largest price increase in Bitcoin’s history. Based on the graph, financial advisors predict the future of Bitcoin to be quite lucrative.
To recognize these patterns, you’ll need to get acquainted with “candlesticks graphs.” This is where research comes in handy. This will also help you learn why investing in a coin when it’s at an ATH, or All-Time High, is never a wise option. In short, always look at the charts before making an investment.
In the cryptocurrency world, money travels from an impatient investor to a patient investor. The prices fluctuate dramatically, and sometimes novice investors get nervous. When the prices fall (the market dips), nervous investors impulsively sell their coins to avoid further losses. However, they forget that they also incur loss while selling.
Note that the market will typically bounce around day to day and week to week. This is called “correction of the market,” meaning investors who sell their coins at a lower price will later regret their decision of panic selling. In short, selling at the bottom and buying at the top will cost you your fortune. Patience is the key.
Not Having An Exit Plan
Not having an exit plan will only entangle you in the swamp of crypto market. Once a newbie has made a good entry into the market, they tend to forget to plan a long-term stay. The crypto market is like the stock market. The market rises and falls, never allowing itself to be quantized. After every pump, it’s natural for prices to dip in order to maintain a particular stability.
Don’t let greed get the better of you, and avoid waiting for the “big high.” Instead, cash out in small fragments when the market is on a high trend. This will save you from the dips that may occur. If you’re buying for trading, you must have an exit plan so that you can book your profits and move on.
Looking for the Next Big Coin
In the past, Bitcoin registered a massive hike from $880 to $20,000. This quickly got people talking. However, other coins followed the same fate such as Ripple (XRP), Ethereum (ETH), and NEO. Such price hikes lure beginner investors, who tend to forget that not all coins are the same, not all coins grow, and not all coins yield profits. T
here are over 1,600 coins/tokens in the market and not every coin will perform like the ones I mentioned earlier. For a short-term investment, the possibility of finding a massive gain is not that positive. Hence, investment with a realistic approach is always important.
Only Investing in a Single Coin
Once a rookie gets lucky in the market, greed often overpowers them. Consequently, they invest all of their money in one go. If the market goes down, they risk losing their entire fortune. While they “may” get lucky, it’s not advisable to bet all of your money on a possibility. There’s a reason why financial investors stress the importance of “maintaining portfolios” where you invest in different coins at different proportions.
In doing so, your portfolio survives even when the market takes a hit. The crypto market has just started to bloom. Make sure you stay clear of thorns, shills in disguise, bad decision making, and ignorance. Only then can you enjoy the highs and make money from the crypto market.