Major mistakes when investing in cryptocurrencies

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In early 2020, interest in bitcoins and cryptocurrencies resumed.  Public sentiment always follows price.  A rise in price most often ...

In early 2020, interest in bitcoins and cryptocurrencies resumed. Public sentiment always follows price. A rise in price most often means a growing audience attention, and the media unexpectedly starts to make predictions about new record highs.
Each new positive wave from the media brings newbies into the world of cryptocurrencies who hear that people are getting rich by investing in cryptocurrencies. However, instead of blindly believing such headlines, it is better to examine the mistakes of others and learn from them.
When investing in cryptocurrencies, you also need to think about what exactly can ruin your portfolio. You need to know and keep these things in mind, and by following the list, make sure your cryptocurrency investments are safe and you are on your way to success.

1. Give in to FOMO

FOMO is an obsessive fear of missing a good opportunity or interesting event. This emotion can be associated with thoughts that someone is lucky, but you are not. For example, you see that someone on social networks talks about how they "raised decent money" from a coin. This can give you a corresponding emotional response and make you regret missing the opportunity.
2017 became one of the most hype years in the cryptoindustry, as Bitcoin grew from $ 1000 to $ 20,000 during the year. Those who bought cryptocurrency at a lower price and sold it at the maximum really became millionaires. However, this was preceded by a long patience and faith in bitcoin. Each of us could have ended up in that place, but in reality he did not.
There were also those who bought bitcoin “at the top” (at the highest price), succumbing to FOMO. Probably, there are now people among them, patiently waiting for the new high point of the main cryptocurrency. But there were also those who got rid of the coins at a loss for themselves.

2. Irresponsible investment

A well-known rule among crypto investors says that "you cannot invest more than you can afford to lose."
Everything is very simple. It is unacceptable to invest your money in rent; college tuition fees; funds for vacation; funds that you saved up for housing, etc. Otherwise - financial collapse. Ignore the greedy voice from within that tells you to "invest more."
It is better to have a specific fund of funds that is used for risky speculation. Some analysts and investors believe that this fund should not exceed 1% of your portfolio.
Setting clear goals and managing risk is not the easiest aspect of investing. However, a working investment plan can clearly demonstrate to you that the difference between a modest income and a total loss of funds is enormous.
Another aspect of irresponsible investing may well be to blindly follow the signals of popular analysts on social media. Analysts have followers and therefore must be “good”.
The best way is to check each asset for its fundamental and technical merits. In other words, do your own research (DYOR).

3. Selling the bottom

The flip side of buying a top is selling a bottom. Looking back, we come to the conclusion that "the bottom was not worth selling back then." Such a sale can trigger complex and confusing human emotions - more likely, panic. However, the relationship of emotion to economic markets is even more incomprehensible.
If an investment loses 80% of its value within a few months, then this is probably enough to make even the most inveterate investor nervous.

4. Bragging about income

Perhaps you have done well on cryptocurrencies and feel like the smartest person. Of course, you can tell your friends about it. You can just as well brag to your non-blooded relatives who claim that cryptocurrencies are a scam.
HOWEVER, DO NOT DO THIS, as this “broadcast of victories” makes you visible. There are many people in the world who have been hated for winning the lottery. And acting as financial experts in their case was not worth it, since a financial expert would hardly need to play the lottery. And for heaven's sake, don't stick a bitcoin sticker on your car.
However, you can celebrate and broadcast, especially if people can really learn a lot from your stories and even losing trades.

5. Ignoring other investments

There is no need to ignore other investments. If cryptocurrencies perform well, this does not mean that there are no other bull markets in the world. Cryptocurrencies have been gaining a lot of attention lately, but over the past 10 years, the traditional market has consistently shown new highs.
Take a look at this S&P 500 chart. You probably missed these gains. This 10% per annum is not the "abnormal" gain that cryptocurrencies have experienced in the past. Overall, this is a more reliable and less volatile market. Many investors took advantage of the opportunities in this market and made good profits.

6. Carelessness in storing coins

If in other types of investments, such as stocks, your assets are available when you enter your portfolio, then in the world of cryptocurrencies everything is different.
In cryptocurrencies, the loss of private keys means that your coins are lost forever. You can see them grow over time, but you won't have any access to your funds.
There are a lot of people in the world who do not have wallet backups. A fire or hard drive failure can destroy your cryptocurrency portfolio 100%. The people who own the coins often become the only “point of failure”, while the cryptocurrency systems themselves are usually decentralized and impossible to hack.
When cryptocurrency projects update their codebase and wallets, it can hurt your coins as well. Crypto communities often remind users of such updates, and you should be aware of the nuances to consider when restoring access to your coins.

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Crypto Currency Magazine: Major mistakes when investing in cryptocurrencies
Major mistakes when investing in cryptocurrencies
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