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10 Mistakes New Crypto Gems Investors Make

Making significant profits from cryptocurrency investments in 2023 is accessible to everyone. However, luck plays a part in choosing the right time to invest.

Aug 24, 20235.7K Shares172.8K ViewsWritten By: Johnny K.Reviewed By: Luke Williams
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  1. Ignorance of the basics
  2. You Overtrade
  3. You are not Using a VPN
  4. You Fall for the Hype
  5. You Chase Cheap Coins
  6. Ignoring Fees
  7. You Invest Your Life Savings
  8. Emotional Investing
  9. You Don’t Understand Tax Implications
  10. You Think You Must Always Be Right
  11. Conclusion

Making significant profits from cryptocurrency investments in 2023 is accessible to everyone. However, luck plays a part in choosing the right time to invest. Only those who consistently refine their cryptocurrency investment strategy, learning from each mistake, can outperform the masses.

Skilled and disciplined investors are the ones who ultimately achieve substantial profits over time. Conversely, hopeful individuals and inexperienced investors end up holding onto worthless coins, which is a detrimental long-term investment approach in the world of cryptocurrency. Here are some tips to help with crypto gems investing.

Ignorance of the basics

If you're just starting, you're probably eager to begin trading. I understand. However, it's important not to rush into it. Take a little time to develop a solid cryptocurrency trading strategy and educate yourself.

Do you have a good grasp of blockchain technology and Bitcoin? Are you familiar with the difference between circulating and total supply? Do you understand the concept of inflation? Are you knowledgeable about exchanges, wallets, private keys, and public keys?

If you can't confidently answer these fundamental questions, you might run into trouble sooner than you think. So take some time to prepare yourself, as it is crucial. To get a good grasp of the basics, you can explore our website. We have a wealth of resources to help you get started and learn about cryptocurrency investment strategies.

You Overtrade

New cryptocurrency investors often fall into the trap of making a common mistake. Some of them have the desire to engage in as many as 20 trades per day, which is incredibly risky. As a result, many end up losing money due to excessive fees or because they make poor trades and then try to recover losses by trading even more. It is crucial to recognize that frequent trading hampers sound decision-making and leads to higher trading fees.

You are not Using a VPN

Among all crypto knowledge, the issue of security should be especially acute. Otherwise, even if only real pearls are stored in your wallet address, you can simply lose them. For secure crypto trading, you absolutely need VeePN. This is the VPN service that offers security, minimal latency, and high speed on all servers (2500+ in total).

You Fall for the Hype

Cryptocurrency trading and investment are heavily influenced by social media. It's no surprise that investors and crypto creators go to great lengths to generate excitement around a token. This was especially evident during the 2018 crypto crash and continues to impact investors today.

When using social media, it's important to be cautious of overly enticing information. Articles with headlines like "Bitcoin made me a Millionaire" or "Ethereum is going to Rocket in Value" are often deceptive. I'm not suggesting that cryptocurrency can't lead to massive profits or that Ethereum won't appreciate. However, media hype frequently creates investment bubbles that cause a sudden surge in a cryptocurrency's worth.

You Chase Cheap Coins

Always remember, the potential growth of a coin is not influenced by its price. Avoid pursuing low-cost coins with the hopes of making a fortune. Many uninformed investors in the crypto industry purchase cheap cryptocurrencies, assuming they have a greater chance of significant returns.

Instead, focus on market capitalization when searching for valuable gems. The market cap provides a more accurate indication of a coin's worth.

Ignoring Fees

New investors often dive into purchasing crypto without understanding the intricacies of gas fees on exchanges. For instance, using a credit card to buy crypto may incur hefty surcharge fees (3% or more), along with extra charges from the card company. Discovering crypto exchanges with low fees and the optimal method for buying and trading can lead to significant long-term savings.

Ignoring Fees
Ignoring Fees

You Invest Your Life Savings

Investing has a golden rule: only risk what you can afford to lose. Approach it with a mindset of preparedness for unexpected outcomes. Stay calm and maintain a healthy financial life, allowing room for regular expenses, even amidst price fluctuations.

There are numerous cautionary tales of individuals who invested recklessly with their life savings or borrowed substantial amounts. This is a grave mistake to avoid. Interestingly, even if you manage to strike gold, greed tends to take over. For instance, let's say you invest $50,000 and see your balance surging to $150,000. Your mind might downplay these gains, making them seem less significant than they truly are.

Emotional Investing

New cryptocurrency investors often fall into the trap of emotional investing, a common mistake. This involves making impulsive decisions that disregard factual information. Take Bitcoin, for example, a highly volatile asset with frequent value fluctuations.

It's crucial to resist the urge to panic sell your Bitcoin due to a minor dip, as these dips often self-correct within a few days. Emotional investing is a dangerous path that can lead to substantial financial losses. Therefore, it's crucial to avoid it at all costs.

You Don’t Understand Tax Implications

Overtrading also has the potential to increase the tax liabilities of individuals, particularly in the United States and Canada. Many individuals mistakenly believe that taxes are only owed on profits that have been converted back to USD/CAD, but the reality is that taxes must be paid on every single trade conducted, including crypto to crypto exchanges.

Both the IRS and CRA consider each trade as a realized gain or loss, meaning that if you purchase Ether with Bitcoin, they perceive it as a taxable event involving a realized gain or loss. They assume that you sold Ethereum for USD, and then used the USD to purchase Bitcoin, even though this may not accurately reflect what occurred.

You Think You Must Always Be Right

I need to inform you that you should reconsider your perspective as no one is infallible. It's perfectly acceptable and quite normal. When it comes to investing, speculation and luck play vital roles, even for seasoned professionals. To triumph in this realm, the key is to be accurate a certain percentage of the time. For instance, if you double your investments 55% of the time, you can sustain losses 45% of the time and still come out profitable in the long haul.

Conclusion

When you're new to crypto investing, it can be daunting. However, by avoiding common mistakes, you can gain confidence and prevent significant financial losses resulting from a lack of knowledge.

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