The volatile cryptocurrency market is often quick to throw newcomers out of relevancy for failing to master the strategies that work and avoid mistakes. Many new investors fall into the trap of investing a lot of money at once, hoping to gain more immediately.
As a new investor, you should conduct enough research before committing to any cryptocurrency to avoid misinformation and scams. Here are the four main cryptocurrency mistakes newcomers make that you should avoid to boost your chances for maximum returns.
Not Learning Your Fees and Taxes
For your cryptocurrency investments to attract maximum returns, you must learn all the fees and taxes you’ll be subjected to beforehand. New investors tend to ignore the platform fees and transaction costs incurred when transacting. For instance, the fees for purchasing crypto using a credit card can sometimes rise to 3% or more and sometimes include additional card charges from your credit card provider.
Governments are now imposing additional taxes deducted at source for crypto trading. The U.S. and Indian governments now impose over 30% of capital gain taxes on crypto trading. You must learn what your local government is charging for tax and calculate your least possible returns before getting into the crypto market.
Not Diversifying Crypto Portfolios
With only a few digital currencies receiving the limelight, many newcomers may think only those few exist and limit their choices to them. To minimize the risk of losing everything, it’s always wise to invest in several digital currencies simultaneously. As with stocks and shares, when you spread your money across different digital currencies, you minimize the risk of being overexposed when one drops in value.
Conversely, you also stand a chance to gain massively if one of the digital currencies in your investment portfolio gains value rapidly. For instance, if you buy Bitcoin with Kraken and you buy Ethereum, Dogecoin, or any other digital currency, you tend to gain when one of these gains a massive value boost. All you need to do is research extensively before choosing what coin to invest in.
Only Buying When Prices Are Low
While low prices are the dream bargain of any buyer, sometimes getting a low-price offer isn’t always a good deal to take, especially with cryptos. If a cryptocurrency sells at an all-time low, you should investigate why before investing your money. It could be that it has lost its value and won’t get back up for a long time. With proper research and expert advice, you should tell when to buy and when it’s too early to put your money in the market.
Rushing the Process
There are many resources on YouTube and other educational platforms that beginners can access for introductory research on crypto trading. Sadly, some of these resources can push users to rush their crypto journey by believing they can hack it overnight. Going for overcomplicated strategies while you’re just beginning can be detrimental, especially with the volatile nature of digital coins.
It’s important to start small with the strategies you understand and grow carefully as you master them. When the right time comes, you can improve from what you’ve already tried, knowing the red areas not to touch and the unexploited areas to explore.
Like any other new project you undertake, investing in crypto can feel overwhelming and challenging in the early days. However, with robust research and determination, you can always scale the murky waters of the crypto industry.
