Many people invest in cryptocurrency for either the wrong reasons or practically the wrong way or even both; and when they lose money due to their bad decisions, they claim bitcoin or even cryptocurrency generally is a scam.
This post is intended to show you how (NOT) to invest in cryptocurrencies to avoid being a teller of “stories that touch the heart”
NOTE: Almost everyone makes these mistakes at least 5 times before they internalize the lessons learned. If you currently don’t make these mistakes, you are already way ahead of the 99% of all crypto investors and traders out there.
6 Dumb Ways to Invest in Cryptocurrencies
1. Invest Ignorantly
According to sage investor and business tycoon –Warren Buffet; “never invest in anything you do not understand”.
Your first responsibility as a cryptocurrency investor is to educate yourself.
Learn as much as you can from everyone; however, your investment decision must be your personal responsibility.
There are very few things that can be as stupid as putting your money into a system, business or technology you literarily have no idea about.
You shouldn’t invest a single cent until you’ve spent time educating yourself on the space.
Stay informed, do your own research; read articles, watch videos and listen to podcasts. You cannot be too informed or knowledgeable about this subject.
More encouraging is the fact that there is tons of free quality information on practically every aspect of cryptocurrency investing on the internet.
A few clicks around will present you with some of the best content on the space and on any particular cryptocurrency you are researching on.
More so, many bloggers and content creators will be glad to write about any topic you want to learn if you reach out to or drop a comment for them in that regard.
Your investment decisions and outcomes are your own personal responsibilities.
Therefore take the necessary time to educate yourself before you commit your money into any cryptocurrency or project.
2. Invest to Get Rich Quick
Investing in cryptocurrencies with the mindset of getting-rich-quick is a sure recipe for disappointment.
If you come into crypto with this mindset, you’ll most likely end up investing in the wrong projects (scams) or take very unwise risks that will make you lose your money easily –thus actually making some other faceless scammer richer.
There’s never going to be another Erick Finman or Pizza guy story kind of overnight crypto millionaires.
These success stories are of people that invested in bitcoin in the very early days and not results that can be scientifically duplicated.
More so, their wealth never came “overnight” as they held onto their bitcoin for several years before their investment became a newsworthy story.
If you really do want to get rich faster investing in cryptocurrency then you must be willing to learn and unlearn many things quickly.
Be patient, monitor, and manage your portfolio diligently and take calculated risks.
You can still make a lot more money faster in crypto compared to other forms of investment but it takes doing some due diligence, patience and investing selectively and responsibly.
3. Invest Emotionally –Be Greedy or Fearful
Greed will make you lose money and fear will make you miss the money.
Emotional investors exist to make other market participants richer.
The “buy high and sell low” –the exact reverse of what they should be doing to make money.
Emotional investors are controlled by the “Fear of Missing Out” (FOMO) or Fear, Uncertainty, and Doubt (FUD).
Successful investors, on the other hand, are without emotions and are not fazed by a 120% moon or a 70% dip.
Rather they take calculated risks, enter the market based on strong technical or fundamental indicators and exit at their profit targets.
The “Fear of Missing Out” (FOMO) is the main reason many people buy-in at the top of a price rally.
A lot of people will never buy into crypto until they hear that the price has skyrocketed.
Thereby making the smart traders rich rather than themselves, and washing their dollars down the throat of smart traders who are more than happy and fast enough to grab them.
In crypto, sometimes “timing” is everything. The right trade taken at the wrong time is still wrong, and the wrong trade taken at the right time is also wrong.
The basic idea of investing in crypto is to “buy low and sell high” so you can keep a profit.
This is in theory simple enough but in practice very difficult to execute without proper timing.
More so, sometimes patience is all you require to turn a losing entry into a winning trade and profitable investment.
Remember, no matter how high an asset has appreciated in value or price it will come down to a previous or new low.
Your job is to monitor, identify and seize the moment it reaches a new low and buy-in at that point to join the next ride up.
Never trade out of fear of missing out on the profits earlier investors are making.
If you didn’t buy at the bottom; you should wait for the next bottom. Buying into the profit of others is almost always a sure way to get hurt.
More so, never panic sell when the market takes a downturn. The market will always rebound and if you exited all out of fear you’ll not be on the train when it rides back up.
Yeah, I know –dumb investors will buy back in at the new top.
4. Invest or Store All Your Crypto in One Place
“Don’t put all your eggs in one basket” is all wrong. I tell you “put all your eggs in one basket, and then watch that basket.” ~ Andrew Carnegie
“Never put all your egg in one basket” ~Proverb.
Ok, so which do you follow now?
Listen to yourself. Would you rather have a single source of income or multiple?
- Never invest all your money in crypto.
- Never invest everything on one cryptocurrency or project. HODL the best 5 to 20 cryptocurrencies that you know.
- Never store your crypto assets in one place, exchange or wallet. Spread them in at least 2 to 3 places.
- Always sell your profitable assets in batches, never all at once –So u can always make more if the price keeps rising or buy back at lower prices if the prices go down.
5. Invest In HYIPs and PONZI Schemes
More money was lost to HYIPs and Ponzi schemes in 2017 than was lost from the cryptocurrency crash of 2018 through 2019.
The year 2017 could be considered the year of HYIPs, PONZI schemes, and all the best and most stupid ways to lose your hard-earned money.
From fake ICOS lead by lending coins to more organized scams like Bitconnect and Laser.
Cloud miners paying 20% daily ROI, Telegram bots paying 40% daily ROI –they’re all crazy and many poured in their money.
They never got it back –not even their capital let alone profits.
Now any scheme, platform, or project that promises to “double your money” within 1 to 30 days or even a year is obviously a scam or Ponzi at best.
You shouldn’t even stop to think about or analyze it. They’re all scams no matter what white paper, blue paper, green paper, yellow paper, investment strategy or trading indicators they present.
Most times people who invest in HYIPs and Ponzi schemes actually want to get rich quick.
Now the person who actually gets rich quick in a Ponzi or HYIP is the founders and if you are not the founder you’re already on the losing side. It’s just better you don’t participate.
6. Invest With Money You Cannot Afford to Lose
Never invest more than you can afford to lose –this is a golden business and investment advice that’s slowly turning into a cliché that is usually ignored.
If you invest more money than you are prepared to lose, you become much more emotional and tend to make bad trades and investment decisions.
There was a story sometime in 2017 or 2018 –can’t remember the exact year; of a man who sold all his family properties and invested the money in bitcoin.
He made so much more profit that could replace all he sold in ten places over.
Should you do the same? YES! – If you want to sleep on the street or beg for food.
What you cannot afford to lose never take a risk with it.
Even when you’re confident of the potential future performance of the market it is still good you invest only as much you can afford to lose without developing a high blood pressure or worse a heart attack.
Some monies you certainly shouldn’t use to buy crypto; except of course you are fully prepared to face the consequences (whatever it is) if anything goes wrong:
- Never take a loan or use a credit card to buy crypto
- Never use your rent or kids’ school fees to buy crypto
- Never use Company money in your possession to buy crypto
- Never use the money entrusted to you for safekeeping to buy crypto
- Never use your entire life savings to buy crypto
- Never use the money you cannot afford to lose to buy crypto (worth repeating)
However, if you can afford to lose all of your family fortunes, life savings, job, friendships, and livelihood (which I doubt) then, yeah, you can invest it all in and expect the best or prepare for the worst –you can only die once after all.
On a final note; remember –you never lose in crypto until you sell.
If you’re already in the red, you’re better off HODLing for as long as it takes to be in profit before you sell –except you are actually holding a “shitcoin” (in which case we’ll advise you cut your losses by selling and move on).
Every great project out there will appreciate in value given sufficient time.
Be educated, avoid (excess) greed, be bold, be patient, HODL.