Top Crypto Investment Regrets

Cryptocurrencies can be a goldmine for those who know how to use them. However, not all investors come with the necessary expertise, let alone ample financial or technological knowledge. Even despite that, there is no shortage of people eager to play in the market.

But there are also things to watch out for. Here are the five top crypto investment mistakes that investors are constantly making.

1. Selling Prematurely

Failing to focus on the long-term is extremely common among investors, and is mostly driven by human psychology, which often leads to irrational behavior at times when cold-blooded, a.k.a. detached and rational, decision making is needed.

Many investors have shared their regrets of selling as soon as their crypto starts showing gains, quickly cashing in profits out of fear that all price growth will vanish and their asset’s value will hit rock bottom. 

On the side of the same coin, numerous people sell their assets when its price starts to plunge. Although the golden rule of investment says to “buy low, sell high”, the impulse to sell assets when they undergo a drastic decline is strong indeed and, unfortunately, leads to losses. 

The fact remains that markets have a tendency to evolve and grow over time, where highs are followed by higher highs. Thinking long-term, holding onto assets or employing the ‘Dollar-Cost Averaging’ strategy can help to calm emotions, avoid expensive mistakes, and even see you end up with the profits one day. 

2. Blindly Trusting an Influencer

According to experts, numerous people, especially of the younger generations, feel encouraged to invest in digital currencies that are promoted by social media influencers. 

Various public figures and celebrities with significant follower bases endorse digital assets, making profit from them by encouraging people with little to no knowledge about crypto or investing at all.

Blindly trusting such people can often end in tragedy. As was the case in the message below:

Simply put, influencers may have their own motives for talking about assets in a certain way. They may have been paid to promote a certain project, which could end up being a rug pull, or they may simply lack the expertise to give investment advise, even basing their claims on unverified and non-credible sources.

To avoid falling into the trap of believing in the wrong influencer, it is generally better to avoid influencers who promise guaranteed or high returns, exaggerate their marketing and promotional offers, or shill crypto projects with anonymous or even non existant team members. 

Just as in any other case for investing, it is always crucial to be critical and do your own research before committing your money. 

3. Overdiversification

Everyone with a financial background always advises traders not to keep “all your eggs in one basket” and to diversify investments. This is the key to intelligent investing, they say. 

A diversified portfolio means that assets are spread across different industries, sectors or markets, which increases risk-adjusted returns in the long-term and protects against market volatility. 

That is, as long as you do not go to extremes and over diversify, of course. Over-diversification, or buying an overabundance of coins, or tokens, can increase risk, transaction costs, and other fees that will lead to a lower final returns in the end. 

“Should be possible with 5-10 investments. No need to overcomplicate it”, advise those successful in crypto.

4. Investing More Than You Can Afford to Lose

The crypto space is full of heartbreaking stories from people who put their life savings into digital assets, only to see them collapse within minutes, or ending up as a rug pull scam. 

Putting one’s entire savings into digital coins in the hope of a better financial future is gambling, and should always be considered such. Digital currencies are highly volatile assets. The value of an investment can fall as well as rise, so you may well get back less than you initially invested, or even lose it all in the blink of an eye. 

This is why one of the key rules of investment is to never invest more than you can afford to lose. Experienced investors and traders never enter the market all-in, especially if they do not have an investment plan. 

Setting clear goals and risk management rules creates discipline, and discipline brings structure that protects you from hasty decisions, keep trades under control, and finally, helps to increase investment returns. 

5. Transfer Mistakes

Almost a third of all mined Bitcoins are locked in wallets that can’t be accessed. Only God can know exactly how much of the world’s cryptocurrencies have been lost forever, simply because they were carelessly transferred to the wrong address, or worse, nowhere at all. 

Unlike fiat money transactions, cryptocurrency transfers are irreversible, meaning it is impossible to retrieve them once the transaction has been made. If even the slightest spelling mistake occurs while filling in the recipient’s wallet address, the transaction will still take place, but the funds will be lost.

There is no way to cancel or reverse a transaction and recover lost funds, barring that they were deposited into another user’s wallet, and that person is kind enough to agree to return the money.

In many cases, crypto traders not only lose money in typo related incidents, but also by transferring tokens to the wrong network entirely. 

Various tokens are hosted across different blockchains, such as Ethereum, the Binance Smart Chain, Polygon and Tron. Each chain has its own form of wallet address; mistakes often occur when cryptocurrencies from one type of chain (e.g. Ethereum) are transferred to another chain (e.g. Binance Smart Chain) which does not support the wallets and coins of the original blockchain.

Even experienced users can make such a mistake and they often do. This is why it is essential for every crypto investor to always double check both the sending and receiving blockchains before carrying out any transactions.