Last updated on June 4th, 2025 at 10:58 am
The crypto market can be unpredictable and there are many mistakes due to which you can lose your money without even realizing it (Trust me, we all have).
In this article, we will talk about some of the worst crypto mistakes and what you can do to avoid them. We hope that by the end of this post, you can learn from some of our mistakes and know how to avoid them if and when you encounter such situations.
Let’s dive in!
1. Investing Without Knowledge
Irrespective of what asset class it is, the first rule of investment is to educate yourself and learn more about what you’re putting your hard-earned money into.
At the end of the day, you are responsible for your own money. Learning more about the asset class will help you increase your conviction, which will come in handy to tackle market volatility.
This is much more important for cryptocurrency because it is a relatively new asset class and has only been around for slightly over a decade. Thus, before you invest a dollar into crypto, it would be best for you to invest some time learning about the basics of crypto and how it works. This will also help you manage your risks better and avoid losing all your money.
2. Buying On Speculation – Avoid FOMO
Buying on speculation is probably the worst and the most common mistake that beginners in the crypto space tend to make. Because they ape into buying assets at their all-time highs due to the fear of missing out (FOMO), they end up buying high and selling low. As a result, their crypto investment journey ends before it can even begin.
The crypto market is volatile and it is almost impossible to predict the price movement and try to time the market. When you buy because of speculation in the hope of riding the rally and making some profit, you forget about the basics of investing, i.e., the fundamentals of a project.
When the market collapses, these coins that started their journey ‘to the moon’ are the first ones to fall flat.
Thus, it is advisable to not buy based on speculation, especially if you’re a newcomer in the crypto market. The skill of Doing Your Own Research (DYOR) and buying based on the fundamentals and future prospects of a project will be your best friends when it comes to crypto investing in the long term.
3. Putting All Your Eggs In One Basket
Another common mistake made by beginners across all financial markets is not diversifying their portfolios. While focused investing can help you amass tremendous wealth, doing so successfully is a lot easier said than done and it is a skill that should be left to seasoned investors who have spent enough time in the market.
If you want to invest in crypto, it would be best to consider spreading your investments across different coins and projects in different sectors of the space. This will help you mitigate the risk of incurring a major loss in your early days.
For starters, you can begin building your portfolio by investing in some of the market leaders like Bitcoin and Ethereum and complement them by adding some battle-tested DeFi tokens like Maker and Compound. When you’ve built a solid foundation, it is time to add some heat into your portfolio by investing in some trending NFT platform’s transactional tokens or collecting some NFTs.
4. Not Having A Plan
Before investing in any crypto, it is important to have a plan in place. A plan when it comes to investing is vital because it reduces the emotions involved in the process. This is important because emotions can possibly lead us to FOMO into buying a shitcoin or panic selling during a market crash.
Thus, before investing, determine what kind of investor you are – if you’re just looking to trade to make some quick profit or if you want to make some serious crypto gains by HODLing your coins.
Depending on your purpose, it is important to educate yourself accordingly. For instance, if you plan to HODL, it would be best to learn more about the Dollar Cost Averaging (DCA) strategy which is considered to be the best investment strategy for long-term investors. Whereas, if you want to trade in crypto, it would be best to learn more about technical analysis and having an exit strategy in place.
5. Forgetting About Your Risk Appetite
Only invest what you can afford to lose. While the prospect of making tremendous gains in crypto can seem very attractive, it is important not to forget the other side of the coin where it is also possible that you might end up losing it all.
When you try to take too much risk, you tend to make decisions based on emotions and not logic. Successful investing is all about reducing the emotions involved in the process as they often lead to making sub-optimal decisions because you go against your initial plan.
Thus, always remember your risk appetite and stick to your long-term investment while you start allocating to your crypto-portfolio slowly.
6. Falling For A Scam
The crypto market has rekt even seasoned investors like Mark Cuban let alone beginners to investing. Being a relatively new market, it is still immature and there are a lot of scams such as Ponzi schemes or phishing attacks. Thus, before you invest in anything in the crypto market, ask yourself whether the investment opportunity sounds too good to be true. If it does, it is probably better to stay away from it in order to stay #SAFU.
7. Choosing Quantity Over Quality – Buying Cheap Coins
Many newbies feel that buying a cheap coin is the best investment strategy to become a millionaire. This could not be far from the truth, especially in crypto. This is because most of the coins that are priced low and have a small market cap are generally shitcoins that do not have any future prospects. While you might think you’ve found the next Bitcoin, you may have just invested in another crypto scam.
8. Using The Wrong Crypto Exchange
A common mistake that most beginners make is choosing the wrong exchange according to their requirements. For instance, if you are a trader in crypto, it would be best to choose an exchange that has low fees and allows instant withdrawals. Whereas, as a long-term investor who plans on HODLing their bags in cold-wallets off the exchange, it would be best to look for exchanges that allow you to take your coins off the platform at a low cost.
Irrespective of your investment requirements, it is vital to ensure that the exchange is safe to use, has the coins that you want to buy, and does not have any restrictive policies when it comes to withdrawals.
9. Investing Only In Crypto
While investing in crypto is good, investing only in crypto can be disastrous. In fact, you should never invest only in one asset class. While this point is similar to not putting all your eggs in one basket, it is worth mentioning separately. This is because many retail investors begin investing in crypto because they have heard stories of their friends getting ultra-rich from their crypto investments and as a result, end up going all-in into crypto without having a backup plan. After all, who doesn’t want to become a billionaire, right?
This can lead to a disaster and it is a mistake that must be avoided at all costs. The best way to begin investing in crypto is to only invest what you can afford to lose and slowly build your portfolio over time.
10. Avoid The Sunk Cost Fallacy
Committing the sunk cost fallacy means to remain invested in something because you have put in too much effort or resources into it. This results in making decisions that are irrational and hence lead to suboptimal outcomes or in this case, below par crypto gains.
Thus, it is important not to make this mistake and only make decisions that are in the best interest of your future and not based on what happened in the past.
In Conclusion…
- We believe that the points mentioned above can help you learn about what not to do in crypto. By avoiding some of these common mistakes in crypto, you can successfully come one step closer to making profits in the space.
- From a personal point of view, the biggest mistake, however, would be to not invest in crypto at all. While there might be some FUD around the space at the moment, in the long run, crypto and blockchain technology will come out as the winner and all of us who are actively involved in the space right now will finally make it in life. If crypto wins, everybody wins.
So, what are some of the common crypto mistakes that you’ve made? Did we miss out on any mistakes in this list?
Comment down below and let us know what you think!
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