5 Common Mistakes Crypto Beginners Make

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Nowadays, investors are provided with a considerably more extensive range of options. In addition to conventional ones like bonds, stocks, and real estate, there are also modern choices such as cryptocurrencies.

Cryptocurrencies are very promising and have attracted a lot of interest since their introduction to the world of finance. Accordingly, Bitcoin (BTC), a major digital currency in the market, has a total value of about $590 billion today.

It’s also smart to look into other cryptocurrencies when investing as a way of diversifying. If you don’t want to stray far from the most recognized name, Bitcoin SV (BSV) is your best bet, as it plans to keep the digital currency stable and scale massively. These are just some of the original protocols set forth by the creator of Bitcoin, “Satoshi Nakamoto,” in his whitepaper that Bitcoin SV continues to follow.

If you are interested in investing in cryptocurrencies, there are many essential factors that you must consider other than the price of the virtual coin you are eyeing. This is because the world of crypto trading is incredibly volatile, and you have to act strategically if you want to mitigate risks and protect your digital assets.

Below, we’ll explore several mistakes that beginners in crypto trading often commit, as well as helpful tips on how to avoid making them

Not doing enough research

As previously mentioned, a virtual coin’s current price is not the only metric to consider. It’s vital to conduct substantial research and weigh in different factors before building your investment portfolio.

Accordingly, when selecting cryptos, one good factor to consider is the block size, which refers to the maximum limit of transactions a block in the chain can be filled with. A block that exceeds the block size limit will be rejected by the network.

BTC has a block size limit of 32 MB. While that does sound hefty, Bitcoin SV is more considerable at 128 MB. A large block size limit means that the system can perform with high bandwidth and fast transaction speed, while those with a small limit may experience longer waiting times for transactions. A large block size also means that more transactions can be accommodated, which helps the BSV network scale.

You can also look at the market capitalization or market cap. This metric provides you with an idea of the risks you’ll face when investing in a particular coin. It also gives you a glimpse of its potential growth.

There are still many indicators to consider and reliable tools to utilize. You may consult other traders or a financial expert if you have the resources. Signing up for newsletters of trading experts may be beneficial, as well, as long as you keep in mind that any advice should not be regarded as a guarantee or absolute truth. Remember, you are always investing at your own risk.

Keeping virtual coins in online wallets

Many novices tend to keep their first virtual currencies in the exchanger’s website after purchasing. This is a very dangerous move simply because the internet is not a safe place, and digital assets are very susceptible to cyber theft and other fraudulent activities.

To manage your assets effectively, you must have substantial control and ownership of them. A trader may own a digital asset stored in an online wallet, but they do not have complete control over it.

Moreover, as said previously, online wallets are common targets of cybercriminals. In fact, there have been numerous high-profile hacks that resulted in millions of dollars in crypto being stolen from exchange platforms. One of the best ways to keep your digital assets safe, then, is to keep them in a secure offline or hardware wallet immediately after each purchase.

Not diversifying

Cryptocurrencies belong to a range of classes of market capitalization with their own sets of pros and cons. To add, virtual coins of different categories are not likely to grow at the same time. For instance, your mid-cap cryptos may appreciate just when your large-cap cryptos are depreciating.

Hence, a great way to maximize your investments’ potential is by building a diversified portfolio that strategically combines cryptos of different classes. Moreover, owning cryptos of different brands can also help you reduce risks and achieve balance. However, you must remember that while diversifying can help lower risks, they cannot be eliminated completely.

Diversifying your investment portfolio is indeed one of the best risk mitigation measures. However, why not take things a step further by also trying out different ways to acquire crypto? Instead of getting all your virtual coins through buying, you can explore other processes like airdropping and mining. Bitcoin mining allows you to earn assets without putting down cash for them.

Selling and buying at peak prices

It’s typical for beginners to sell their cryptos hastily at the first sign of growth. However, it can be tricky to determine if an asset’s price is really at its peak. There’s a chance that the value will continue growing, and selling prematurely can be very demoralizing. However, you can beat the market by selling your assets in stages instead of all at once.

Another common mistake is buying when a coin’s value surges. Many think that the growth will continue, but temporary spikes are widespread in cryptocurrency. The amount can start dipping again, and by the time you sell them, you may end up making a massive loss. Therefore, it’s best to avoid buying during an asset’s successful run.

Not having a strategy

It’s impractical to build a house without a blueprint. The same can be said of investing in cryptocurrencies without a plan. It’s essential to determine your goals and outline your target. Moreover, you should make exit plans for all of your trades to avoid losing profits.

Having a timeframe when you want to get returns on your investments is another smart move. You can begin by making long- and short-term plans, or if it’s more suitable, establish yourself in daily cycles.

The Takeaway

As the adage goes, “Rome wasn’t built in a day.” This also applies to investment ventures. It’s impossible to master the art of crypto trading overnight. Additionally, even after you become more experienced, it’s inevitable to make mistakes every once in a while.

Much like traditional investment assets, investing in cryptocurrency can be a waiting game. With the volatility that comes with it, it will be smart to put your money into digital assets with a long-term plan in mind. For instance, BSV aims to build a blockchain with better scaling for enterprise and eventual mass adoption to bring efficiency into each transaction.

Removing all likelihood of losses is not the goal. As long as you strategize well, build a diversified portfolio, and remain well-informed on the subject of cryptocurrencies, you will still be able to effectively protect and grow your digital assets.

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