Investing in bitcoin and other cryptocurrencies has become easier than ever through online companies and crypto exchanges. Many of the risks that existed for the first investors, remain for today’s new entrants to the market. The market watch has identified four mistakes that new investors in crypto make very often and which you should avoid.
Not buying the right crypto currency
If you decide to buy bitcoin, make sure you buy it and not any other cryptocurrency bearing the name bitcoin – such as bitcoin cash, bitcoin gold, bitcoin SY, bitcoin private and dozens of other currencies. If you do buy the “wrong currency”, do not be alarmed, as it is not the end of the world. You can always sell it and buy the right one, hoping that it will be profitable.
Not prepared for fluctuations
“Compared to classic financial investments, crypto fluctuations are uncharted,” financial adviser Theresa Morrison told Marketwatch.
She advises new investors to start investing in small amounts, even $50 a month, in an established cryptocurrency they understand, and then forget about it. The fluctuations are so great that an investor can go crazy if he constantly monitors the market.
In addition, newbies would be better off sticking to cryptocurrencies they know and understand. “I want my clients to look at established currencies in the first place – say crypto blue chips like bitcoin and ether,” said another financial adviser.
Investing more than you can afford
Invest money you can afford to lose. If you have credit card debt, you should pay it down, before investing in any crypto currencies. It is natural to want to get involved in the bitcoin industry, when it’s value increases, but you should avoid any unnecessary purchases.
You forgot the password
Although the bitcoin mining capacity totals 21 million bitcoins, the number to be traded will be smaller, simply because some of them will be lost forever as their owners forget the codes in their digital wallets. About 20% of the bitcoins mined so far have been lost, according to Chainanalysis.
Therefore, how you store the password is crucial and investors should have thought it through. Writing it on a piece of paper is a solution, but even this does not fully guarantee it, as the paper with the code can be stolen and used by a third party.