7 Common Mistakes Made By New Crypto Investors

There’s a famous golden rule by legendary investor Warren Buffett about investing:

Rule #1: Never Lose Money.

Rule # 2: Never Forget Rule Number 1.

Here are some of the most frequent mistakes new crypto investors make and how to avoid them.

1. Jumping in Without Doing Any Research

Many investors hear about crypto when crypto prices are skyrocketing, in this phase, the hype becomes real, the thrill is real, therefore without doing any research you are tempted to jump in. 

Tell me, what will happen if you don't study and face an exam? obviously you will fail. 

Likewise, if you invest in this space without understanding what cryptocurrencies are, and how the market cycles work, then surely you will end up losing all your money.

How to Avoid 

💡Pro Tip: Do your research! don't forget you are dealing with your hard-earned money. 

Refer my blog Practical Investment Guide: A Beginner’s Warm Up, to get a good overall idea about how to get into crypto smartly and quickly. Follow the links provided there and take your time to learn. 

2. Falling for Scams

Don't forget that cryptocurrency is a trillion-dollar market, therefore it definitely attracts scammers from fake investments schemes to phishing attacks everywhere.

You will end up losing all your money if you fall into a scam, therefore your best guard against these scams is to learn about the common types of scams and play this game safe without being too greedy.

How to Avoid 

💡Pro Tip: Refer my blog about Top Crypto Scams to Avoid, get a good understanding about these scams and always remember, if an offer seems too good to be true, then it's probably a scam. Therefore, don't be too greedy. 

3. Neglecting Security Practices

Let me get this straight, if you ignore good security practices, then you will certainly end up losing your money. It's as simple as that!

How to Avoid

💡Pro Tip 1: Use strong, unique passwords for all your crypto-related exchange accounts and enable two-factor authentication (2FA). 

💡Pro Tip 2: Avoid storing large amounts of cryptocurrency on exchanges; instead, use a hardware wallet or other secure cold storage options for long-term holdings. Ledger,Keystone,CypherRock,Trezor Safe 3 and Trezor Safe 5 are all good options in the market.

Refer my blog about top cold wallets in the market.

💡Pro Tip 3: Use a dedicated laptop to log into your exchange accounts or install a good virus guard. Spyware like keyloggers may be present in your computer which could steal all your keystrokes and potentially identify your passwords. 

4. Chasing the Hype

When crypto is booming, it feels like everyone is getting in on the action - your friends, your friends' friends, their grandmas, and even the grandmas' bridge club!

Remember, hype often drives up prices only to crash later leaving the greatest fools who bought at the top with huge losses. 

How to Avoid

💡Pro Tip1: Don’t chase the hype, market prices always experience a healthy pullback. No crypto will rise like a straight line. 

Therefore, just wait for a good pull back in prices, at least 15 -20% drop, this could give a better entry point.

💡Pro Tip 2: Don't listen to Youtubers and social media influencers who promote garbage coins, they are like lizards, they know how to change their color according to the environment. They often promote certain crypto so that they can sell their bags when prices rise. 

5. Investing More than You Could Afford to Lose

Crypto is certainly very tempting to invest because of the huge gains it offers in a relatively small period of time. The gains offered by stock markets are nothing compared to those of crypto.  

Therefore, the temptation to invest more than you could afford to lose is very real in crypto. I've even seen people take out loans to invest, which is an incredibly risky and unwise decision.

How to Avoid

💡Pro Tip 1: Only invest money that you could afford to lose. Create a budget and stick to it. Think of crypto as a high-risk, high-reward investment.

💡Pro Tip 2: Don’t let emotions drive your decisions. This market rewards strategic thinking, not emotional reactions. The key to success here is that smart investors profit from those who let their emotions take control. Don’t fall into that trap

6. Putting All Your Money in One Coin

Some new investors go all-in on a single cryptocurrency, thinking it will deliver massive returns. Don't make this mistake, because if that cryptocurrency fails, you could lose everything.

When you invest in a stock or a crypto project, you do so with the hope that it will grow and bring you profits. 

However, it's important to understand that the project's success is not under your control. Its performance depends on factors such as its use cases, development, and marketing efforts managed by others.

Therefore, do not put too much faith in one cryptocurrency coin.

How to Avoid

💡Pro Tip: Diversify your investments, invest in 3-5 solid crypto projects and remember not to over diversify, as it will dilute your gains.

7. Panicking During Market Drops

Crypto markets are highly volatile, therefore new investors often panic sell during dips locking in their losses.

How to Avoid

💡Pro Tip: As new investors you should invest for the long term. Pick a few solid crypto projects that provide high utility and Dollar Cost average. 

In that way you don't have to panic for small price dips because you focus on the big picture and long-term potential without being swayed by short-term market volatility.

Final Thoughts

In this digital space, it takes only seconds to lose all the hard-earned money you have spent years earning. So, don’t think you know everything and neglect the security practices I have mentioned above.

Refer to my blogs about crypto scams and make sure you learn about the best security practices to protect your wealth in crypto. Learn about cryptocurrencies, their tokenomics, and investing strategies, and invest wisely. Practice patience and always prioritize securing your wealth.

"If you’ve been reading this whole blog to this very final line, I wish you nothing but the very best. May you prosper financially and be a blessing to everyone around you." 

Disclaimer: The contents of this article are for informational purposes only and are not financial advice. The views here are just the author’s opinions. The crypto market is volatile, so be sure to do your own research before investing.