Common Mistakes in Crypto You Want to Avoid
The latest report from the regulator Financial Conduct Authority (FCA), around 2.3 million UK citizens own crypto in one form or another. In this relatively new but complex space of digital currency, it can be easy to get caught up in the hype of news and combined with the fear of missing out or losing money, end up making costly mistakes. With a bit of knowledge and discipline, however, the following common crypto mistakes are easy to avoid:
Buying Simply Because the Price is Low
We have all come across the phrase ‘’buy low, sell high’’ in the trading space. However, just because a coin’s price is low does not necessarily mean it’s a bargain. In some cases, the price is low for a reason, so be wary of coins with falling user rates.
In some cases, prices will fall because a project isn’t getting properly updated, making the users lose trust in the coin. Ensure that you are investing wisely with the help of Bitcode.ai
Thinking that Crypto is Easy Money
An important thing to note is that making money via any form of trading, be it stocks, commodities, shares, and even crypto is that there is no easy money. Any party that tells you otherwise is probably trying to trick you into making a mistake.
You will come across platforms and people who suggest maximizing your returns by going all in. However, just like in gambling, this is a quick and often sure-fire way of losing all your money.
A better way to go about crypto investment is to you’re a portion of your investing capital i.e 5% or 10%. It is also advisable to have an emergency savings account that should never be put into the market.
Forgetting Your Crypto Password/Key
If you store your crypto offline, then you have a hardware wallet that is encrypted. Without a special keyphrase, it is impossible to access your coins and so, you better not forget it. We have seen too many cases where people lost millions just because they forgot the password to their wallets.
Falling for Scams
Crypto scams are everywhere. Some are obvious while others, not so much. As such, it is imperative to do your homework and be wary of the common scams such as:
- Pump and Dumps
A pump and dump scheme is simply when a group of people inflates the price of a coin, usually sending the price of the asset skyrocketing and then selling (dumping) making profits. More often than not, the perpetrators will have amassed many coins, usually through pre-mining before the asset is available to the public.
Once the unwitting trader sees the price rise, they try to get into the action and once the price reaches a certain level, the criminals sell, sending the price spiraling downwards in a matter of seconds.
Usually, pump and dump schemes are promoted on social media platforms like Telegram.
- Cloud Multiplier Scams
In other cases, fraudsters contact victims through text or email with an ‘investment opportunity’, promising to double or triple their initial investment into a coin like Bitcoin if they send it to their crypto wallet.
- Malicious Wallets
One of the most important crypto tips is to only use reputable wallets like Exodus, Trezor, MetaMask, or Ledger. Unknown or dodgy wallets, even those found on App Store or Google Play will only steal your crypto.