The entry of big investors, governments, banks, and other institutions into the world of cryptocurrency has created a huge appetite for digital assets. With so many newbies rushing to try their hands in cryptocurrency investment, there’s always the risk of making serious mistakes that can be detrimental to the long-term viability of potential investors’ portfolios. With that at the back of your mind, you want to make sure that you avoid the six most common crypto investment. mistakes that most first-time investors usually make.
Are you new to investing? Then you will want to make sure to avoid these common crypto investment mistakes.
Crypto investment mistakes
1. Attracted by Low Prices
It’s a matter of the fact that most investors buy cryptocurrencies during the dip (when the prices are low) with plans to sell at a higher price. The truth is that low prices don’t necessarily translate into a bargain. There could be times when prices are low because developers are exiting a project, so it stops being updated. Always research why cryptocurrency rates are falling among users before joining the bandwagon.
2. Falling Prey to Fraudsters
Some clever scammers contact their victims via email, offering them lucrative “investment opportunities.” In most cases, they draw their victims with promises of doubling or even tripling their Bitcoin investment amounts in a short while if only they can send their crypto to particular digital wallets. It’s important to remember that there’s never a free lunch, and any offers for free money must be viewed with a good dose of skepticism.
3. Fake Cryptocurrencies
Lots of hype and great excitement almost always accompany announcements for new coins. Some fraudsters are always out to take advantage of this kind of mentality. Think about fraud involving ICOs (Initial Coin Offerings), where scammers quickly take investors’ coins using different dubious means.
Victims transfer their money or coins to addresses controlled by scammers when making payments, and getting them to reverse the payment is always impossible. The most common practice involves creating fake websites or fraudulent mobile apps resembling authentic ICOs or asking interested users to place their coins in corrupted digital wallets. Centra Tech is a well-known example of a fraud that was unknowingly endorsed by several celebrities, including boxer Floyd Mayweather and singer DJ Khaled.
It would help if you also were on the lookout for fake coins through which criminals can steal your identity through phishing – this involves persuading you to click on phony links on emails that end up installing malware on your computer. The best practice is to desist from taking anybody else’s word as gospel truth and doing your research correctly before you make any form of investment.
There are digital criminal gangs who inflate or deflate the prices of the smaller to lesser-known cryptocurrencies and create a fake buy or sell orders. The effect is that this could sometimes send the value of a cryptocurrency skyrocketing by hundreds of percentages at a time. As soon as some unwitting traders try to grab the opportunity, the gangsters will cancel the orders they were not going to fulfill anyway immediately and cause a price crash in the process.
Others acquire a significant amount of a particular cryptocurrency by pre-mining before it becomes available to the general public. In a scheme known as pump and dump, such will then pump up the price by social media promotions, and after they sell it at a high price, they disappear, and users are left with worthless coins.
5. Malicious Wallet Software
There are tens of dodgy or unknown digital wallets on the App Store or Google Play store that scammers can use to steal your hard-earned cash. It’s always advisable to use the big and established digital wallet names like Ledger, Trezor, Exodus, or MetaMask, to name but a few.
6. Thinking Crypto is a Get-Rich-Quick Scheme
Like all other forms of investment, making money through cryptocurrency takes time and effort. Whether you’re trying our hand in stocks and shares or commodities like gold, silver, or digital assets, always remember that anyone who tells you of an easy way to make money could most likely be lying to you.
Now that you know some of the main crypto investment mistakes that investors make you are a step closer to making the correct decisions on the crypto market. When it comes to cryptocurrency investment, you want to remember that since it’s a field that is still evolving, you should always keep your ear on the ground and listen to what experts have to say. Join and participate in trusted forums like Reddit, where people freely discuss the topic. Always remember that when a deal sounds too good to be true, it most likely is.
Tom is a freelance writer with over 10-years’ experience in content creation, blog writing, and SEO specializing in the blockchain and cryptocurrency niche. As a philosophical figurehead, he believes that to make our world a better place, we must invest in incorruptible products and procedures, of which Bitcoin and other cryptocurrencies are leading examples.