Here is Why You Lose Money in Cryptocurrencies and How To Change That

By Justino | An Angle of Truth | 22 Apr 2021


Do not get this wrong or twisted, we do not mean this article to stigmatize or spread fear on the risks of cryptocurrencies but to shed some light on some of the common reasons people lose money in cryptocurrencies. 

We all probably know that the last few years have been exponentially profitable for people in cryptocurrencies including newbies such as Elon Musk, and investment companies such as MicroStrategy, and as much as crypto is known for its profits, it does present avenues for losing money.

And many people end up losing their gains. We have highlighted why people lose money in cryptocurrencies here.

Little or No D.Y.O.R

As a newbie, it might tempt you to rush and make some unplanned purchases in crypto due to fear of missing out (F.O.M.O). At this point you just want to be part of the herd and make some profits as everyone else is doing, without proper understanding of what the project you are investing in is all about and what its token economics looks like.

Without proper education on what you are venturing in might lead to poor decisions, which might lead to loss., i.e., some people rush to trade leveraged items without comprehending the risks or without understanding concepts of risk management.

Make a point of understanding what cryptocurrencies are if you are new to the topic, Do Your Own Research (D.Y.O.R) into the investment tools you decide to work with and when satisfied, use one finger at a time to test the heat of the water.

Driven by Greed

This is more of a psychological dilemma, and we know where there is money, greed is always around the corner. Some people get into cryptocurrencies to make quick money. Well, this is true as we have seen exponential gains ranging from 1000% to 10,000% with some cryptocurrency based projects. When you hear about such returns, what happens? Yea right.

As a newbie or normal investor, if you do not know how to control your greed emotion, you will always end up making the wrong decisions, such as wrong entry and exit points on your investments. Alternatively, greed could make you lose all your profits as you expect more gains. Fear of missing out (F.O.M.O) and regret of missing out (R.O.M.O) mostly stir greed.

Always take your time, connect with people who experience in the space, and if you feel that F.O.M.O or R.O.M.O primarily drives you, it might be advisable to take a chill pill. Avoid investing money you cannot afford to lose.

Victim of Scams

Elon Musk recently tweeted that “Crypto and scammers should be put into one room”. What does this tell you about the space? To me, it means that the crypto world presents everyone with opportunities of making revenue, some through legitimate ways and others through illegitimate ways.

As you look to dive into crypto, you know scammers are ahead and they know what many people think of crypto, so they build smart applications to lure people driven by greed, people who do not do their research and people who invest all their money. They smile and you cry and curse. Reason being a few things, you simply did not do what point one and two advised.

Study investment avenues, search for reviews online, and ask your crypto survey friends or relatives about such platforms. Don’t just decide, make sure you make a good one. If a platform’s returns are too good that you feel like telling the entire world about it, probably think twice.

You have No Strategy

The likes of the company Micro-strategy and Tesla have a plan of how and when will enter the cryptocurrency market and how and when to exit, do you? Some people buy tokens or coins at all-time high prices and regret their decisions if the price retraces a little exiting on their positions and securing a loss. Others run to trade high-risk features without a plan on when to enter and exit. Without a plan, you might end up having poor entry/exit points, invest in the wrong tools, be subject to indecision and F.O.M.O.

You might wonder, what should I do? It all gets back to the same points, conduct your research and have a plan on the category of assets you are getting into, i.e., De-Fi, exchange tokens, NFT tokens. Identify a list of projects under this category that have a dedicated team, good token economics, a product that makes sense. 

Last but not least, look at the price performance of their token and establish an appropriate entry/exit point. If ready, execute your plan and always practice patience, remember Rome was not built in a day.

Conclusion

It’s important to understand why people lose money to avoid repeating the same mistakes. Building wealth is not a one day thing, and if you are lucky enough to have done so, without the right mentality, habits and plans you might end up losing all of it.

So stay open-minded, do your research before investing, never invest what you cannot afford to lose, content yourself with your profits since it has never been a competition. One more thing, short-term price devaluation is the pain you have to endeavor for long-term gains.

Have you lost money in crypto? share your experience and how you changed that.

 

This article was first published on CryptoCurrency Academy.

So what are you waiting for? Sign up here for a KuCoin account,

Earn some crypto ($ETH, $AMPL, and $iFARM) just for Reading and Writing with a Publish0x account,

How do you rate this article?


2

0

Justino
Justino

Self-Published Author. Editor.


An Angle of Truth
An Angle of Truth

The musings from a student of life.

Send a $0.01 microtip in crypto to the author, and earn yourself as you read!

20% to author / 80% to me.
We pay the tips from our rewards pool.