What are the most common crypto mistakes that investors make and how can you avoid them? The bad news about crypto investing is that you will make a lot of mistakes. The good news is that other people have made those mistakes already and you can learn from their pain to avoid repeating these mistakes yourself. So let’s dive into some of the most common mistakes that investors are making! 

1. Investing More than You Can Afford to Lose.

Most investors do this actually, so don’t beat yourself up. But this does remain the most common and destructive mistake that investors make. When times are good and the markets are pumping your lizard brain tells you to bet more and more. But there comes a point when it is simply too much. Risk gets too intense, and the reward starts to dwindle. Never buy crypto on credit cards. Never invest or gamble with your rent money or the money to feed your kids. Any money put into crypto should be done so on the basis that it could all literally go to zero.

2. Not Taking your Security Seriously.

Hackers and scammers make it their full time job to steal your coins. Constant vigilance is required. We strongly recommend using a hardware wallet to secure your funds. Our recommendation is Ledger. But just getting a hardware wallet is not enough. You must ensure that your passphrase is always kept safe and many other details. Reread our security section for more info. 

3. Going All In.

I know that when markets are pumping, having any cash on hand seems like a silly idea, but maintaining a constant cash position is a wise move. Having cash on hand at all times, say 5 to 10% of your portfolio allows you to be flexible. 

1. You can use it to earn yield in defi or a high interest account 
2. You can buys dips 
3. You can just have the mental security of having a safety net
4. You can enter new positions without needing to sell old ones

4. Paying Too Much in Fees. 

There is a reason that we recommend Binance, and that is because they have very cheap fees. If you are paying 2 or 3% per transaction on an exchange like Coinbase then you are robbing yourself. It may not sound like too much that one time you pay it, but those fees add up fast, and the loss of long term gains by simply getting less for your money can have a big impact. 

5. Trading Without Knowing What you are Doing.

Trading is not easy, many will quote the figure that 90% of traders lose 90% of their accounts in the first 90 days. This is not because trading is just impossible, but instead because it actually requires time to learn how to do it. Most never invest that time and get crushed. You don’t need to day trade.

6. Failing to Take Profits.

It happens every bull run. Some people just think it will only ever go up, and then it crashes and burns and you have lost all of your gains and may even now be facing huge losses. Because this is such an incredibly high risk market it is essential to book in profits when you have them. See our profit taking guide for more info. 

7. Not Using your Coins.

Many new investors kind of get “stuck” on exchanges. But, that likely means you are missing out on making even more money with some of your coins. For example, Solana can be staked. If you stake it then you can earn passive income from staking. If you do not stake it then you simply miss out on free money. Don’t do that! If you need help then refer to our staking and defi guides. 

8. Chasing Green Candles

Many new investors to crypto, perhaps yourself included, come in at the wrong time. They come when markets are pumping and everything is green. This is when they buy as well. While it feels good at the time, the truth is that chasing big market pumps is often risky. Patience is required to do well in crypto. Wait for pullbacks and corrections. They always come. Buy low, sell high. Not the other way around. 

9. Investing Only in Crypto.

If you like pain, then ok, go for it. But if you want a balanced and lower risk portfolio then you will need to diversify away from crypto as well. Other markets like stocks, metals, and real estate can offer a great way to re-invest crypto gains and to be invested in areas that might perform well when crypto is tanking. Crypto is just a part of a well rounded portfolio. If you are “all in” on crypto then be ready for extreme volatility and to watch some investments literally go to zero. 

10. Failing to Learn the Market.

The excitement to just get involved and go all in as soon as possible is high in crypto, but it is rarely the best strategy. You must take the time to learn about the asset class. Take the time to learn about the fundamentals of what you are buying. This is at the end of the day, your money, and you should take the time to make sure you are investing it in coins that have a good chance of making you money. The vast majority of coins are terrible investments. You must take the time to learn the skills necessary to analyze coins and you must always do your own research on any investment before pulling the trigger. 

Crypto is an exciting market filled with opportunities for making money, but it is also filled with danger. Take your time and try not to repeat the mistakes that so many others have made before you!