If you are a beginner investor and ready to invest in cryptocurrency, there are certain mistakes that need to be avoided. However, these are also the mistakes that new investors make all the time, and which can eventually blow one’s cryptocurrency portfolio completely out of proportion, causing financial loss.Read on to learn more about how to turn into a master of blockchain.
The first mistake that many beginners make is buying high and selling low, which is the exact opposite of what a cryptocurrency investor should do. You will have to buy low and sell high to make a profit. Newbie investors often make the mistake of misunderstanding the chart.
For instance, if they watch the price of cryptocurrency spike like crazy, they see it as a signal of the seemingly perfect timing to buy cryptocurrency. But, as in many cases, the very next day, the price drops, which doesn’t necessarily mean that the cryptocurrency has tanked and that the investor has potentially lost money unless they sell it.
However, it is common amongst beginner investors to watch such pullbacks and get panicked, which then causes them to sell their cryptocurrency. Resultantly, they lose money because the chart shows recovery the very next day, and this fluctuating trend continues.
So, the question is, what should newbie cryptocurrency investors do? The solution to this potential issue is that newbies should think of the opposite. Whenever they see a “run-up,” it is never the ideal time to buy cryptocurrency. Before you jump on the crypto train, one should allow things to cool off. Click here for the latest Bitcoin price chart and news.
Buying Crypto because it is Cheap
Another common mistake made by newbie cryptocurrency investors is to buy “cheap.” Usually, their logic revolves around a certain thought process where they think that they will invest in “lite coin,” for instance, only because it is way cheaper than the top-seller, bitcoin. And if the cheaper digital currency ever gets up to the price of bitcoin, they believe that it will render them a huge profit.
The problem with this all is that the investors usually only look at the unit price of the cheaper cryptocurrency instead of taking in the bigger picture of the entire crypto-market cap. The remedy is that whenever you look at the unit price, also take a look at the market cap which basically equals the unit price times the supply.
Comparing the different types of cryptocurrency this way makes it easier for newbie investors to determine the plausibility of a crypto-coin and whether it will ever surpass the value of bitcoin despite being cheaper at the moment.
Borrowing Money to Invest
Another common mistake is to use leverage to invest in cryptocurrency. Understandably, cryptocurrency is a volatile market, and no one should ever borrow money to invest in cryptocurrency. Besides, using leverage is probably one of the fastest ways to completely wipe out your trading account and leave you with nothing in your vault, which you have to avoid at all costs.