The world of cryptocurrencies is still new, and even the most experienced investors still only have a few years of experience with it. The crypto space still lacks the proper infrastructure, so finding the best way to use cryptos is still quite difficult. This is an even bigger problem for new investors, which are joining the space all the time.
While there is a growing desire to use this new technology in an everyday life, it is still far away from its perfected form. Because of this, numerous mistakes in its use are being made all the time. Since this technology is so different from traditional financial tools, the way it is handled has to be different as well.
This is something that novices take a long while to understand, and in the meantime, they are making huge errors that can often cost them a lot of money. Because of that, we have decided to make a list of largest mistakes that new investors are making.
7 Mistakes New Crypto Investors Make
Hopefully, this list might help you to avoid some of these mistakes and will set you on the right course when it comes to using and handling Bitcoin and other cryptos.
Not Doing Their Own Research
Do your own research, or DYOR, as it is commonly said, is one of the crucial first steps for every aspiring investor. The fact is that everyone on the internet has their own opinion, and the crypto space is not different. Because of this, the newcomers to the crypto world often make a mistake of relying too much on what others say, without doing their own research.
While the opinion of others, especially when it comes to influential people, can often serve as a guideline, it should never be taken as a guarantee of anything.
Getting Rid Of Their Coins
In the crypto space, there is a term called HODL. Is a misspelled version of the word HOLD, and it represents a strategy of holding on to your coins. It is a long-term strategy, based on the belief that the future market will be better than the current one. As such, many believe that it is worth keeping the coins in a wallet and waiting for these better times, instead of just passing the coins along right away.
HODLing has been known to affect the entire market since it represents trust in the coin. Constantly selling them often means that there is no trust in the coin, which is affecting its price.
Entering The Mining Game With Dreams Of Getting Rich
Back in the day, when Bitcoin first appeared, crypto mining was extremely profitable. Well, maybe not by the standards of those days, but definitely by modern ones. Bitcoin was cheap back then, and not a lot of people was looking to mine it. Those who did it are now rich. This has inspired many to start mining BTC now.
However, the situation has changed over the years. While Bitcoin is highly valued, it is also much difficult to mine. It requires expensive equipment, a lot of resources like power, as well as time. Not to mention that corporations have uncovered that there is profit to be made in mining, and have thus created huge mining pools that successfully prevent individuals from getting to any new block. It's time to face it — mining BTC today is nowhere near as profitable as it once was.
Losing Sight Of Bitcoin
A lot of new investors think that they are late to the party and that crypto prices won't grow anymore. In fact, they are quite pessimistic about it and believe that the prices can only go down at this point. Obviously, this is not true, and such a belief often leads to losing sight of Bitcoin.
This is a very bad move since Bitcoin is the leader and representative of the entire market at this point. There is rarely a change in the market that was not caused by Bitcoin's price surge. In fact, this coin can almost always be used as an indicator of what's to come for the rest of cryptos. Also, not only is the coin an indicator of what will happen, but Bitcoin itself still holds a huge amount of potential that should not be disregarded.
Not Calculating Taxes
Ever since the true potential of cryptos came into light, governments of pretty much every country in the world started searching for a way of exploiting it. Taxation of crypto-related profits is, of course, their favorite strategy. That way, they don't have to do any work, and they get to make a profit out of this technology.
This is something that a lot of people fail to realize in time, and as such, they end up having to pay huge taxes that they never saw coming.
Listening To Others And Doing As They Are Told
Listening to what others have to say is always a smart thing to do, especially if they have more knowledge and experience. However, relying entirely on their advice is not as smart, since theirs is only one opinion in the sea of many. Use their opinions to form your own, but do not depend on them completely, since the first mistake that they make will cost you much more than it will them.
Making Decisions Based On Emotions
Any change of the crypto market can lead to strong emotions, whether it is a rise in prices or their drop. However, it is never a good idea to make business decisions based on those emotions alone. Do not be in a rush to sell or buy BTC only because the price has suddenly gone up or down. It always pays much more to remain calm and calculated, to do the research, and make a decision backed by facts and probability.
7 Mistakes New Crypto Investors Make Conclusion
It is easy to make a mistake, especially when it comes to dealing with cryptos. However, you don't always have to make one in order to learn how to avoid it in the future. Hopefully, this list of the most common mistakes will help new investors in avoiding them. Even if it does, there are still many other traps for you to fall into, so always remember to be careful, calm, and calculated in your crypto dealings.