Home » Crypto Investing Mistakes and How to Avoid Them

Crypto Investing Mistakes and How to Avoid Them

by Afaque Ghumro

Cryptocurrency investments can be incredibly volatile. Investors often make mistakes that can cost them dearly.

It’s easy to get caught up in the hype of a coin that’s skyrocketing in price on rumors (think John McAfee). However, this is often a sign that the coin has reached its peak and is due for a significant correction.

Avoiding Crypto Tokens and Projects Before Investing

A lot of crypto tokens have gained huge price gains based on social media and newsletter hypes, but not all of them are worth investing in. Rather than going along with the crowd, make sure you understand the project behind each token. Only then, invest.

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As with any investment, crypto can be very volatile. Keeping your emotions in check can help you manage price swings and stay committed to your investment goals. One common mistake many new investors make is succumbing to FOMO.

This fear of missing out can cause you to buy too many cryptos and miss out on big gains, or it can make you hold a coin for longer than necessary, which can lead to significant losses if the cryptocurrency prices go down. It is also important to always remember that crypto investments are stored in digital wallets, and losing your private key or seed phrase can mean your investment is lost forever.

Emotional Investing

When investing in crypto, it’s important to avoid emotional investment decisions. These tend to be driven by short-term market movements and can negatively impact your long-term returns.

For example, a cryptocurrency may be on the rise because of a big news story or the coin’s popularity on social media. When this happens, it’s easy to fall into the trap of following the crowd and buying in.

This can lead to a large loss when the price goes down. To avoid this, only invest an amount that you’re comfortable losing and keep your portfolio diversified.

Another way to avoid emotional investing is to limit how often you check your portfolio. This is because checking it too often can cause you to make impulsive investments based on your emotions and FOMO. Instead, only check your portfolio on a schedule that’s consistent with your investment plan. You can also use limit orders to protect your portfolio against sudden losses.

Buying Too Many Cryptos

Investing in cryptos without thoroughly analysing the projects and tokens first is a recipe for disaster. Cryptocurrencies are highly volatile and their prices can rise or fall in double-digit percentages within hours. Unless you have a well-defined strategy and plan in place, it is easy to get caught up by FOMO or get lured into scams.

It’s also important to avoid letting greed or emotion get the better of you and investing more than you can afford to lose. This is where keeping a journal or spreadsheet of your transactions can come in handy to help you stay on track. Another good practice is ensuring that you back up your 2FA and wallets. Otherwise, if you lose your phone, then you will no longer have access to your coins or tokens.

It’s also a good idea to take profits when the market looks gloomy or you no longer see value in an investment. This requires a certain level of discipline, but it is essential for long-term success in the crypto world.


The best way to minimize risk in crypto investing is to diversify your portfolio and avoid overtrading. This will reduce your exposure to any one project’s risks and help you make more informed investment decisions.

Overtrading is the process of making a large number of trades that do not add to your profitability or performance. This can be caused by many things, including chasing the market after a big price move, fear of missing out (FOMO), or simply boredom. Overtrading can also negatively impact your portfolio through accumulated exchange fees and tax implications.

Investing in crypto can be very lucrative but it is essential to do your research. This includes evaluating the team, project, and use case of a cryptocurrency before investing, as well as conducting fundamental and technical analysis. It is also important to stay updated with the latest industry news and events. Doing so can help you stay on top of trends and opportunities, which will ultimately lead to a more successful investment strategy.

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