7 Famous Crypto Mistakes Traders Need to Avoid

Last updated on December 9th, 2024 at 10:29 am

Do you care to know the 7 famous crypto mistakes traders need to avoid?

Cryptocurrency has huge potential with a market cap of over $2.24 trillion, although this industry has been plagued with poor knowledge and security. According to Coindesk, crypto users lost $2 billion in 2023, which is half the estimated $4.2 billion in 2022 lost through the collapse of FTX, Terra, and Celsius.

Here I’ll be giving you some advice for precautionary measures against future occurrences.

Causes of the 7 Famous Crypto Mistakes Traders Need to Avoid.

1. FOMO (fear of missing out)

The agitated impulse of not missing out can be counterproductive for an investor. This can lead to loss of resources through hasty and uninformed decisions. This psychological drive forces investors to buy crypto assets when prices are in a big surge and often leads to losses.

2. Ignoring Research

Most investors neglect the importance of research on a project before investing, which most times leads to blunders. Without proper research, investors are prone to make uninformed choices that could prove costly in the long haul.

3. Poor Security

In the euphoria of making money, some traders neglect the implementation of robust security for their digital assets. Security tools such as 2-factor authentication and hardware are needed to secure your assets.

4. Online Wallet Storage of Assets

The use of a centralized crypto exchange might seem easy to trade but comes with the advanced risk of losing your assets. Although you still own the crypto assets, technically you’re vulnerable to cyber attacks or scams. The crypto space has experienced various attacks that have led to the loss of millions of dollars worth of crypto assets. Offline storage of crypto assets is the most efficient and secure way to protect assets.

5. Wrong Address

Investors are advised to be extremely cautious while sending crypto assets to any person, considering there’s no way to retrieve assets sent to the wrong address. Some traders fall victim to this due to not paying attention while entering the wallet address, and transactions on blockchain technology are irreversible.

6. Leverage

Most traders are enticed to consider the usage of leverage to multiply their returns. Leverage can adversely affect trading because it demands upfront collateral, and if trading goes south, you may lose all assets. It’s advisable for beginners to avoid leverage, only to utilize it after gaining sufficient experience.

7. Ignoring Fees

It’s important to keep a record of transaction fees as they influence your profit/loss from the investment. Traders need to pay attention to new regulations in the crypto space considering some countries, such as the U.S. and India, have imposed capital gain taxes of over 30% on crypto.

How To Find Crypto Assets

It’s an herculean task for a new investor to find cryptocurrency for investment aside from the prominent ones such as Bitcoin, Ethereum, Solana, etc. It’s important to have a go-to source for information and updates to analyze the rightful crypto that is worth your investment. Here are some ways to identify cryptocurrencies for investment:

• Cryptocurrency Exchanges
• Data Aggregator
• Social Media
• Tools
• Websites
• Decentralized finance platform
• NFT Marketplace
• Initial coin offering

Cryptocurrency Exchanges

Cryptocurrency exchanges are important platforms for finding new crypto assets for investment. For instance, top exchanges like Binance and Coinbase list new cryptocurrencies on their platform. Investors need to create an account on the platform before investing.

Data Aggregator

Data Aggregator helps gather information on cryptocurrencies to find assets for investment. Typical examples of data aggregators like Coinmarketcap and Coingecko collect new lists of crypto assets, prices, market capacity, and trading volume. This helps investors make wise decisions on asset potential.

Social Media

Social media help to communicate valuable information easily and faster. X (formerly Twitter) and Telegram are valuable means of communication in the crypto space. New investors can connect with cryptocurrency developers and founders by simply using some crypto keyword phrases.

Websites

Top websites such as Top ICO List and Smith & Crown can be helpful to find new cryptocurrencies.

Tools

Investors are armed with a lot of tools to verify crypto assets. Top tools like KryptView and BSCCheck help investors check transactions, prices, holders, contracts, etc. to assess investors activities.

DeFi Platform

The DeFi Platform allows users to create dApps (decentralized applications) by combining blockchain and programming. Although DeFi supports peer-to-peer borrowing and lending of crypto assets, Most DeFi have native tokens used for transactions within their platform.

NFT Marketplace

NFT are tokenized digital assets to establish ownership or rights. NFT are emerging trends to influence the operation in the digital landscape. There are a lot of NFT marketplaces to look for digital assets ranging in price.

Initial Coin Offering

Startups use this medium to raise funds by selling digital assets. Investors receive cryptocurrency in exchange for the task they carry out. ICOs have faced their own fair share of challenges, such as scams, which has led to the SEC providing guidance on when ICOs are considered for the sale of securities.

Best Crypto For Investment

There are numerous projects to invest in, but it’s advisable to do thorough research. Here are some of the popular cryptocurrencies.

Bitcoin: price: $62,468, marketcap: $1.2 trillion, $25 billion daily trading volume.

Ethereum: Price—$3,014, market cap—$362 billion, 24-hour trading volume—$11.4 billion
BNB: Price—$594, market cap—$87 billion, $1.9 billion daily trading volume.
Solana: Price—$148, market cap—$66 billion, $2.3 billion daily trading volume.

These are not the only cryptocurrency for investment; there are many others with the potential to grow. Investors need a lot of resources to evaluate the best crypto for investment, such as market cap, 24-hour volume, and project whitepaper.

Conclusion

It is entirely reasonable for investors to approach cryptocurrency with caution, as it remains a relatively young and rapidly evolving asset class. The volatility, regulatory uncertainties, and technological complexities associated with cryptocurrencies demand a thorough and meticulous evaluation before committing funds.

While cryptocurrencies have the potential to diversify investment portfolios and offer substantial returns, they also carry significant risks that may not be suitable for every investor. Conducting comprehensive research, staying informed about market trends, and understanding the underlying technology are crucial steps for anyone considering cryptocurrency investments.

Moreover, it is always wise to consult with a financial professional or advisor before making any investment decisions. Their expertise can help tailor an investment strategy that aligns with your financial goals, risk tolerance, and long-term objectives.

Remember, this article is intended for educational and informational purposes only. It does not constitute financial or investment advice. By arming yourself with knowledge and seeking professional guidance, you can navigate the cryptocurrency landscape more confidently and make informed decisions that support your financial well-being.

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