1. Not Doing Proper Research (FOMO)
The “Fear of Missing Out” leads many investors to buy a cryptocurrency just because it is trending or being widely talked about. This approach is risky, as the asset has often already peaked and may be about to fall.
How to avoid:
Before investing, study the cryptocurrency. Understand its technology, purpose, team behind the project, and price history. Use tools like whitepapers and technical analysis to make informed decisions.
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2. Investing More Than You Can Afford to Lose
The cryptocurrency market is extremely volatile, and prices can rise or fall in a matter of hours. Many people make the mistake of investing money they can’t afford to lose, such as emergency savings or funds for essential expenses.
How to avoid:
Only invest what you are willing to lose. Take a conservative approach and diversify your investments to minimize risk.
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3. Neglecting Asset Security
Lack of knowledge about how to store cryptocurrencies safely is one of the biggest mistakes. Many investors leave their assets on exchanges, which are frequent targets for hackers.
How to avoid:
Use secure digital wallets, such as hardware wallets or offline wallets. Enable two-factor authentication (2FA) on all your accounts and avoid sharing your private keys.
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4. Ignore Fees and Transaction Costs
Transaction fees for both buying and sending cryptocurrencies can be high, especially during times of high demand. Many investors underestimate this cost, which can eat into profits.
How to avoid:
Compare the fees of different exchanges before making transactions. Plan your transactions to avoid unnecessary costs, such as frequent transfers.
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5. Act on Emotion, Not Strategy
Market volatility can lead investors to make impulsive decisions, such as panic selling during declines or euphoric buying during rallies.
How to avoid:
Have a clear strategy before investing. Set entry and exit targets, and stick to your plan regardless of momentary fluctuations.
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