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The Beginner Bitcoin Mistakes You Don’t Want to Make

Within the last few years bitcoin and other cryptocurrencies have been in the news a lot. It’s become very fashionable to talk about these as a legitimate, new form of investing. Many people are looking at it as a way to make money and become wealthy.

But is it better than traditional investing in stocks and bonds? And should everyone be investing in these currencies? Are there issues to consider before you tackle the cryptocurrency world? 

It would be good for you to know that there are some common Bitcoin mistakes beginners tend to make. So if you are thinking about dipping your toe into the Bitcoin trading and investing world, it’s important to understand what to avoid doing. You don’t want this new venture to end in disaster.  

So, let’s look at some of the mistakes Bitcoin investors make and how you can avoid them.

Bitcoin and Cryptocurrency Mistakes to Avoid

1. Going in blind

Without a doubt, the biggest mistake newbies to cryptocurrency trading and investing make is not doing their homework. They read one blog post or watch one Youtube video and immediately download a wallet and start buying. They almost always end up confused or disillusioned with cryptocurrency. 

The thing is, cryptocurrency investment is just like any other investment. There are risks and rewards to be had. So you need to know how to play the market if you want to actually increase your investment.

So, before you even think about buying Bitcoin, read, read and read some more. It would be a wise move to use a demo account to practice trading for awhile. Then only when you feel sure you know what you are doing should you risk any real money.

2. Investing money you can’t afford to lose

This one goes hand in hand with the first mistake. But it’s worth mentioning again here that it’s pretty foolish to invest more money in Bitcoin than you would be comfortable losing.

When it comes to Bitcoin, rewards can be high. But so can risk. Like any other investment, there is the potentially of losing everything should the market freefall. So you need to be careful and you need to keep your crypto trades manageable.

Related Content: The Ultimate Beginner’s Guide to Investing Money the Right Way

3. Allowing your emotions to control you

Getting into Bitcoin can be exciting. You can very easily get wrapped up in your emotions around investing money. Unfortunately, this is a really bad idea and something you should never allow to happen. 

Bitcoin is known to be quite volatile, which means it can rise and fall quite quickly without very much notice at all. If you get carried away by the market highs and invest everything you have because it feels good, you could pretty soon find yourself crashing down to earth.

Take the emotion out of it and study the market. Think of the process as being a clinical one, one that must be thought out and calculated. By doing this you are far less likely to get into trouble.

4. Choosing untrustworthy wallets

Bitcoins are stored in something called digital Crypto wallets. There are literally tens of thousands of them available, which presents a problem to the beginner. Many of those available wallets will not be as secure as they need to be to protect your investments.

It is possible that if you choose wrong, your wallet could be hacked and emptied out and you would be left with nothing. That is why it is so important that you do your research and choose the most stable, well-known and reliable wallets you can find.

5. Not making use of crypto interest accounts

Crypto interest bearing accounts, like ones at HodlRate.com for example, are a great place to store your Bitcoins between trades. This is because, as the name suggests, they will pay interest on any coins that have been deposited into them. This is a great way to get started with Bitcoin because it will allow you to passively earn money on your coins without the risk of trading.

And with interest as high as 6.2 percent, you’ll certainly be getting a better deal than you would by depositing cash into the average bank right now.

6. Not diversifying

Bitcoin is really well known. So when you’re starting out trading with cryptocurrency, it can be tempting to put all of your eggs in that particular basket. However, doing so only increases your risk. If Bitcoin tanks, you lose everything.

That’s why it’s a much better idea to spread your cryptocurrency trading funds around a bit. Etherum is a very popular alternative. But there are plenty of other options for you to explore too.

Related Content: Will Cryptocurrency Replace Stocks as a Primary Investing Option? 

7. Panic selling

Panic selling is very common in the Bitcoin world. This is too bad because it can be a real mistake to sell as soon as your coins start to fall in value. As already mentioned, the Bitcoin market can be pretty volatile.

So if you have a strong enough stomach to hold your nerve and stick with your investments when there’s a dip in the market, chances are your coins will eventually recover and rise in value. If you can’t hold your nerve, the world of Bitcoin and cryptocurrency should not be where you are investing your money.

8. Not staggering your sales

Staggered selling refers to the practice of selling some of your investments while holding on to others. If you don’t employ this strategy when you’ve made some money you’re doing it wrong.

Why? Because by selling just some of your Bitcoins, you still have skin in the game, so to speak, and can potentially make even more.

If you withdraw everything after a windfall, that’s all you’ll ever have. But by leaving some Bitcoins in your wallet, you always have the opportunity to increase your returns.

9. Sticking with it no matter what

If you lose money and you keep losing money, do not keep depositing more money in. Accept you aren’t the Bitcoin whizz you thought, cut your losses and invest in something more traditional.

This form of trading and investment isn’t for everyone. And if you end up following the sunken cost fallacy path, you’ll end up broke and regretful.

If you can avoid these beginner Bitcoin mistakes and you take your time to understand the market, there is every chance you could make some money with crypto. Just proceed with caution and make wise choices if you choose to enter this investing marketplace. 

Leave a Comment or Answer a Question Below: Have you ever tried investing in cryptocurrency? If so, how did it go for you? Do you think the average investor should try this? What other issues surrounding cryptocurrencies should beginners beware of? 

Image courtesy of David McBee at Pexels.com

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