Introduction
Over the past couple of years, Cryptocurrency has appeared as a strong alternative asset class to diversify money, the kind of return Bitcoin has generated for its investors is phenomenal. Therefore it has attracted a lot of new investors in the world of Cryptocurrency who are ready for investing in bitcoin.
Elon Musk has resulted in the quick adoption of cryptocurrency globally, as a result, there’s a sudden rush to invest in bitcoin. However, the majority of crypto investors are immature and end up making many big Bitcoin mistakes while investing. For example, when they are investing in bitcoin they think that it will make them a millionaire overnight. Not only this recently there have been a lot of bitcoin scams that have resulted in people losing their hard-earned money.
In this article, I have identified 7 big Bitcoin mistakes that investors end up making. These mistakes result in wealth destruction instead of wealth creation. what are those common mistakes let’s have a look at mistakes:
1) Lack of Knowledge Invest in random coin
In ten years of development since its 2009 launch, the cryptocurrency market has seen more than 4,000 devices created around the globe. Prompted on by greed, investor enthusiasm often leads quests for the next Bitcoin and promises of outsized returns. This misconception that Bitcoin’s huge profits won’t be repeated causes many to invest in Bitcoin. The pursuit of the next big thing is OK, but retail investors rarely have much capacity in cryptocurrency.
In the past 10 to 12 years, more than a thousand cryptocurrencies–including those from Initial Coin Offerings (ICOs)–have croaked. Like Initial Public Offerings (IPOs), ICOs introduce new coins into the market. The beginning of Bitcoin, the mother of all cryptocurrency promotion has led to various ICOs with some even turning out Bitcoin scams leaving investors disadvantaged. To those with less understanding of Bitcoin, it is recommended to stick with verified and popular cryptocurrencies.
2) Lack of Diversification
When it comes to investment one of the most important rules is diversification. This is a famous saying that “Never keep all your eggs in a single basket” but new investors that have recently started earning tend to get carried away with huge returns. From cryptocurrency in the past and finally, end up investing the majority of their money in cryptocurrency. Some people even end up investing in bitcoin all of their money as an investor it is imperative to understand the risk-against-return aspect of cryptocurrency as it is a high-risk reward game.
While cryptocurrencies can give 5x to 10x return in a quick span it can even fall 50% in no time. So please be very careful with your investment. Try to keep a limited amount of money in cryptocurrency, in the range of one to five percent, and within cryptocurrency, you can even break your investment into three coins rather than keeping all the money in a single coin.
3) Not Secure Wallet Details
When you invest in bitcoin you need to ensure that you secure your wallet details. Because if you forget your password you can lose all your money. For example, a German programmer named Stefan Thomas lost bitcoin worth rupees 1800 crore as he forgot his password. He was the CD of Ripple for five years and used to get paid in cryptocurrency. Once he got 7002 bitcoins for his work at that time the bitcoin price was in few dollars. So he did not pay much attention and forgot his password.
Today bitcoin is worth rupees 1800 crore and now he’s regretting not remembering the password. There are many such cases as per reports around 20 bitcoins have not moved in the last five years. Those bitcoins are worth billions generally when you invest for the long term you do not access the account frequently. And eventually, if you don’t have the password in a safe place there are chances that you might forget the password. So ensure that you do not make this mistake.
4) Timing the Investment
This is again a classic mistake by many crypto investors. They try to time the investment they wait for the cryptocurrency price to fall, but when the price rises further they regret not buying. When the price falls the same set of people do not invest trying to buy at even lower levels.
Ideally, everyone wants to invest when the cryptocurrency is at its lowest level and leave when it is at its peak. But when it comes to investment remember that the best time to invest was yesterday, the next best time is today and the worst time is tomorrow. So make sure that rather than trying to time the market you systematically invest at different intervals so that you average out the price by buying at various levels.
5) Buying High and Selling Low
Buying high and selling low another problem with bitcoin, is that a lot of new investors try to enter the market when the cryptocurrency is rising. they get greedy and end up investing their money at peak. But when there is a correction and the price falls they become fearful, and end up selling their investment at a loss. You need to understand that cryptocurrency is very volatile.
So when you invest in bitcoin you should be able to take a hit of even 50 to 60 percent loss on your investment. and when there’s a sharp correction you should not panic. There have been a lot of cases recently where the cryptocurrency crashed almost 30-40 percent including Bitcoin and many investors ended up selling their investments and lost due to panic mistakes.
6) Investing in Bitcoin Without Knowledge
The majority of investors have no clue about cryptocurrency. What is the technology behind Bitcoin? How does Bitcoin work? How is it different from other currencies? Although it is difficult for a normal retail investor to understand the in-depth technology for cryptocurrency. So, You should at least have a basic understanding, like what is the blockchain technology behind cryptocurrency? What is the right strategy to invest in Bitcoin? How cryptocurrencies are generated? How to secure your Bitcoin wallet etc. The biggest advantage of learning is that you get a trust to invest your money and even if there’s a fall you do not do panic selling.
7) Falling for Scams
Be careful: Money in the crypto world comes easily, but don’t get caught up. They employ crafty schemes against beginner investors to fool them. Even if you’re a beginner to investing in Bitcoin, by getting caught up in traps and scams that may steal your personal information or even crypto itself, things are bad.
Here’s a simple rule to remember: If something is too good to be true, it usually isn’t.
Beware of any coin whose every post on social media makes it sound like the next big thing. Maybe it’s just a scam, like rug pull. Scammers sell a coin, fooling others into investing. After a few people invest, the scammers sell fast making easy money. Unfortunately, this means that those who invested lose their money because the coin becomes less valuable. Do yourself a favor: Before investing in any coin, always do your research.
Conclusion
In this article, we discussed the top mistakes that investors make while investing in Bitcoin. Getting started can be an overwhelming process, especially the part about investing in Bitcoin. But making these mistakes is one reason why you haven’t gone further with your investments. Now don’t make the same errors that have kept thousands of investors from becoming happy in investing.
FAQs
Is Bitcoin a good investment?
You should put your money in bitcoins only if you are the risk-taking type and can afford to lose what they’re going into. But even then, once is probably enough: Money invested in this volatile currency very rarely comes back intact, so it’s worth bearing that long before putting a single dollar therein.
How to invest in Bitcoin?
6 ways to buy Bitcoin
Cryptocurrency exchanges. You can buy Bitcoin from cryptocurrency exchanges.
Traditional stockbrokers.
Bitcoin ATMs.
Trusts or exchange-traded funds.
P2P money transfer apps.
Wallet software.
How much should I invest in Bitcoin?
Some specialists say you shouldn’t invest more than anywhere from 1 % Put another way, when considering how much to invest in crypto overall, limiting your exposure is of the essence. You never should invest more than you can afford to lose.
Is it safe to invest in Bitcoin?
Within the crypto world, bitcoin is most recognized and thus considered one of the relatively safer bets. But like all cryptocurrencies, Bitcoin’s price can change drastically over just a few hours.
