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Top Crypto Investing Mistakes to Avoid

Top Crypto Investing Mistakes to Avoid

Want to have long-term returns in the cryptocurrency market that set you and your family up to become financially independent? Avoid these mistakes.

Recent years in the cryptocurrency market have led new investors to think that the market is a get-rich-quick scheme. People see, on social media, some trades where people have made massive returns in a short amount of time and think they’ll get in to join on these returns.
In reality, this isn’t how life or the market works. Most of the people investing in crypto don’t hit the jackpot and many people (especially in bear markets) see their portfolios crumbling right before their eyes. Don’t be one of those people!
So how do you win long-term? You avoid common mistakes that most investors overlook.

Mistake #1: FOMO and FUD

FOMO (Fear of Missing Out)
Most crypto investors get into the market because they have a fear of missing out. They see people they know making lots of money and think… How can I get in?
So they go and buy a project that seems like it just keeps going up and up thinking this trend will continue forever. However, it doesn’t work out to plan.
They buy and then the project goes down shortly after. They think how is this happening? It has been going up for months.
The truth is when the price of a project pumps many investors who have seen massive returns end up selling (at least a portion) of their holdings to take profits. This leads the price to go down even if the project looks strong long term.
FUD (Fear, Uncertainty, and Doubt)
There’s also the opposite feeling in investing. Investors who get in near a peak and then see the price go down have a feeling that the project is doomed and it will go much lower.
Novice investors tend to sell during this time. They are afraid of losing all their money and want to get out so they don’t experience any more losses to their portfolio.
This leads many investors to sell shortly before the project pumps once again and they think to themselves… I can’t believe I missed out on these returns, I just sold.
This can lead to FOMO once again and then FUD if you haven’t learned, and creates a cycle of buying high and selling low. The opposite you want to do if you are looking to make good returns in any market.

Mistake #2: Going All-In

Another big mistake for novice investors is going All-In.
This happens because people want life-changing returns in a short amount of time… And it happens A LOT.
Crypto prices are still very volatile (given the young nature of the asset class) which can lead to big gains or losses very quickly.
If you go all in there’s a chance the project goes down and then you lose lots of your capital in a short amount of time, even if you chose a good project or the asset class performs very well in the long term.
A better strategy than going all-In on a project is to dollar cost average over many different projects.
Investing in many projects and not a single one is known as diversification. And is a strategy that is recommended by many successful investors. Warren Buffet has a quote:
“Diversification is protection against ignorance.”

Mistake #3: Not Having a Plan

Many novice investors get into an investment without a plan of what to do in the future.
They don’t know what it will do when it goes up. And don’t know what they will do if it goes down.
Are they going to sell, hold, or buy more.
They have no idea. And this leads to many problems long term for their portfolio
Not having a plan and adequate knowledge of market analysis, it can be very difficult to make short and medium-term trades. Novice investors don’t know how to control their allocations and it can lead to them not being successful long term.

Mistake #4: Not Knowing the Market

In the crypto world, there are many different types of projects out there. There are DeFi, NFT’s, Utility Tokens, Stablecoins, Store of Values, Metaverse, and many more.
So how do you know which sector is a good investment? How do you pick which projects in any given area?
To avoid these tough questions, the best answer is once again…
Diversification and not following the crowd seems easy, but it really isn’t for most investors. Emotions get in the way and make this very difficult.

So what’s the answer to achieve long term success in the market?

Well — at Velvet.Capital — we allow anyone to create diversified portfolios, index funds or other financial products with additional yield. Part of our secret sauce is we incorporate modern portfolio theory and highly vetted yield farming to deliver additional yield. We’re building a DeFi asset management protocol that helps both people & institutions (DeFi as a service)! Everyone is welcome to join the Velvet Community!
Think of this type of investing like investing in the S&P 500 but instead of equities you're investing in cryptocurrencies.
By using Velvet.Capital, you don’t have to do extensive research on many different projects, pay attention to market analysis, forecast the future, worry about black swan events, have an extensive plan, fall victim to emotional decisions, or be an expert right away. You can get diversified exposure to a growing asset class and have the potential for reliable and healthy returns over time.
For example, you could ‘Dollar Cost Average’ over time into a diversified DeFi portfolio with Velvet.Capital that is long the crypto market for the long term. Then you don’t have to worry about timing the market. Look at it as an investment in your future and slowly buy-in. Then hold for the long term, like you would investing in an index fund. Not everything needs to happen overnight, it is wise to allocate a portion of your holdings to investments with much longer time horizons.
If you are someone who believes in the market over the long term, but doesn’t want to go through the stress and effort of actively investing, Velvet.Capital is the perfect solution for you!
We aren’t like the other guys (and gals) either- we believe in ‘DeFi Asset Management Done Right’. We’re true DeFi. We will never seize your funds or make risky bets chasing big returns. Velvet.Capital is decentralized and managed on-chain by smart contracts.
Join us in building the DeFi future! Let us know what you think or if you have any questions. The future is bright!
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