Thursday, 16 August 2018

What common mistakes do people make when investing in cryptocurrency?

Below are mistakes common to the field of crypto investing.
Failing to hold

My advice is to buy coins in the top 10 on CoinMarketCap (unless you have done a lot of research) and hold onto these coins for a minimum two years (preferably 5, unless you have creditors knocking on your door).

Chasing the movers.

ICOs are exciting, and a coin, when launched, can quickly triple or quadruple over a 1-month period. Unless you are experienced, these initial rises in value will end quickly (pump and dump) and you can suddenly find yourself holding a bag of coins that no one wants to buy. If that happens, don't sell. Take it on the chin and keep for two years before selling.

Day-trading

Only for the seasoned gun-slinging Billy-the-Kid types. Exchanges charge fees for buying and selling and these costs can equal profits. Not advisable unless you're really experienced, are cold blooded and happy to live on the razor's edge.

Going all in on one coin

I know one investor who sold his house and invested the lot into Siacoin, buying at $0.02. Eight months later, it's sitting around $0.01. I hope his wife is a patient woman. In my opinion, diversification is the key. A minimum of say, five cryptos, held for at least two years. Bought without taking a loan or credit card. Never invest more than you can afford to lose. If you wake up one day and it's all gone, you have to be able to walk away without looking for the nearest building to jump from. Sadly, this has happened more than once.

Listening to shill, marketing hype, technical analysis and FUD (fear, uncertainty, doubt).

Do your own research, then 'buy on the rumors and sell on the news'. If you're not interested in research, buy in the top 10 (eenie meanie minee mo) and sit on them for two years.

Storing coins online

This is about the arguments for and against cold wallet storage. There are arguments for never leaving your tokens on exchanges. Personally, I think offline holding (use of Ledger Wallet) is the ideal method. This places all your token on a thumb drive which can be stored in a sock drawer, home safe, panic room, mattress or bank safe where hackers can't get to it. But it's not foolproof. People move house, get divorced, have curious children, or forget their pins and 24-word passcodes. My preference is to keep coins online and distributed across a number of reputable exchanges. Five coins on five different exchanges. My logic is that I don't trust myself to remember where I put the Ledger Wallets (I have two of them collecting dust somewhere), or that my house may burn down. Having said this, the vast majority of crypto holders go for cold storage (wallets).

Buy high, sell low

Tragedy occurs in the short term when you buy Bitcoin for $17k, then watch as its price drops to $6k. Most of these inexperienced investors cashed out their losses. If they'd been patient, they could have waited until 2020 and hopefully realized some profit. Wait for dips in prices. Watch price versus volume (an indicator of significant price moves). If in doubt, wait another day.

Not putting in the skin.

I have a friend who's been 'studying' crypto for 5 years, waiting for the right time. If you're not prepared to put your cahoonas on the line, you'll never see the offspring of your desires. I started by putting in $500. It grew from there. You learn by your mistakes, not just your studying. As they say, no skin, no win. Those who bitch from the sidelines are not the ones doing the work on the field. Invest or don't, but don't regret your inactions.


By far the biggest fault of investors is to not hold for the long term. The whales (those holding more than 1,000 BTC) didn't cash out when BTC hit $17,000. Many of them are still holding. This exemplifies the incredible trust they have in BTC becoming a long-term alternative to centralized, manipulated fiat dollars.
Never invest more than you can afford, and it's only a loss when you sell the coins. Hold on, then hold on some more. It takes a bit of faith.


By Jim Euclid
source: quora.com 
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