Bitcoin has gone from a small, niche market to enjoying mainstream fame. And, it is that fame that is drawing plenty of new investors to the crypto market. So, we thought we would put together a few mistakes you should avoid when investing in bitcoin.
1. Never invest more than you can afford to lose :
One of the biggest issues is people investing more money than they can afford. Bitcoin is highly volatile, so never, ever invest so much that you are worried about covering next month’s rent.
2. Buying at the top :
Another mistake to avoid is buying near or at the top of bitcoin’s ascension. Let’s take a look at how this happens:
- Bitcoin begins a big surge
- Investors see that there is a 50% increase
- They panic that bitcoin will keep increasing and worry about missing out
- They invest
- The coin keeps rising
- And then bitcoin begins its way back down
- Investors fail to sell until the coin is near worth less than what they bought it for
A good rule of thumb is to never buy deep into a successful run. That’s because crypto often receives an artificial spike when they are hot, and the big increase doesn’t always represent the coin’s actual value with so many people rushing to invest.
3. Not spotting value in crypto before investing :
Bitcoin has brought many investors to cryptocurrency trading. Yet, once people get into it, they diversify to other coins. It is a good strategy, provided you are investing in projects you feel have long-term value. If you plan on doing so, you can securely buy bitcoin in Melbourne or from other dealers in your local area who also sell other types of cryptocurrency.
For instance, investing in altcoins is a good decision, so long as you have done your research and think your investment will yield long-term success. The mistake comes when people invest without thinking about the value.
Some cryptocurrencies have very little use and are just doomed to fail. In such cases, you’re gambling on someone who’ll buy the coins for more than you invested. If you fail to find these people, you’re holding almost worthless coins.
Conclusion :
Investing in cryptocurrencies like bitcoin is certainly risky owing to the high volatility, yet it is this that actually brings plenty of people to the market.
Another thing that crypto investors like is that they seem to be early adopters. While bitcoin has certainly been around for the last nine years or so, many of the altcoins are new and offer investors the chance to get right in on the ground floor.
So, what will be the next big crypto? This is what many investors are still trying to figure out by putting money into projects early, and at times way too early.
However, you should do your best to avoid the three common mistakes we have discussed in this post:
- Never invest more than you can comfortably afford
- Don’t fall victim to fear of missing out
- Always look for long-term value
Most importantly, don’t be convinced that you have to buy immediately, or you will miss the boat. It is still very early on in the crypto game, which means you have loads of time to research your projects and make the right investment choices for you.
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