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Major cryptocurrency coins namely Bitcoin, Ethereum, Ripple and Litecoin

26 Cryptocurrency Investing Mistakes to Avoid

This post consists of 26 cryptocurrency investing mistakes and suggestions on how you can avoid them.

I compiled this list based on my own cryptocurrency journey since 2017. If you are investing in cryptocurrencies, be aware of these common cryptocurrency investing mistakes.

Table of Contents

[Disclaimer: I am not a certified financial planner. My sharing is purely based on my own research and personal experience. To make the best financial decision that suits your own needs, you must conduct your own research and seek the advice of a certified financial planner if necessary]

Cryptocurrency investing mistakes to avoid

I started my cryptocurrency (or crypto in short) investment back in 2017 when I made my first Bitcoin purchase. Along the way, I learned valuable crypto lessons including mistakes when investing in Bitcoin and other cryptocurrencies.

Many of these cryptocurrency investing mistakes might be too ordinary and thus easily overlooked. But, being aware of these cryptocurrency investing mistakes could better prepare you for a more fruitful cryptocurrency investing journey.

Let’s go through the list of 26 cryptocurrency investing mistakes and what you can do about them.

1. You are not ready to invest in cryptocurrency

The top of my common cryptocurrency investing mistakes is you are not ready to start your crypto journey.

Before investing in cryptocurrency, do consider getting your crypto tools ready. Some of the crucial crypto tools are as below:

Your crypto knowledge

Knowledge is power. Having sufficient crypto knowledge improves your crypto investing skills and guides you in making better investment decisions.

A ready-to-use crypto exchange account

For most crypto exchange providers, it is free to open an account. Some of them even shower you with irresistible promotions for new users, such as the Luno promo code of RM75 worth of Bitcoin.

Depending on the crypto exchange, it could take up to a few days to get your crypto account verified. Because of this, consider signing up and getting ready for your crypto account as soon as possible.

Your willing to lose fund

Compared to other investments, cryptocurrency is always associated with high volatility and risks. Thus, get ready for a special fund that you are comfortable losing. And start your crypto investing with this special fund.

After monitoring crypto prices since 2017, especially Bitcoin, I strongly believe it is important to be prepared with your crypto tools. Because you never know when the next huge crypto-investing opportunity will appear.

For example, in the middle of March 2020, there was a huge dip. Bitcoin dropped to about RM25,000 per BTC. You can refer to CoinDesk’s Bitcoin price chart below.

CoinDesk's Bitcoin price chart showing Bitcoin price dropped to around RM22,159 in mid-March 2020.
CoinDesk’s Bitcoin Price Chart shows a huge dip in mid-March 2020

I was lucky because Luno approved my account a few days earlier. And I bought some Bitcoin at around RM25,000 per BTC in March 2020.

So, get your crypto tools ready as soon as possible.

2. You invest your life savings

The second common cryptocurrency investing mistake is you invest your life savings.

After the 2018 Bitcoin boom, many Bitcoin investors lose a huge percentage of their investment.

Among them is a sad story about a 45-year-old Korean teacher who invested 100 million won in cryptocurrencies. Months later, her investment went down about 90%.

A story of a Korean mother who invested her life savings into cryptocurrencies but losing almost all of her investment is an example of cryptocurrency investing mistakes.
Full story on the CNBC website

Since cryptocurrency is often related to volatility and risks, never invest your life savings. Instead, invest only the amount you are willing to lose.

3. You buy because someone else buys

Another common mistake when investing in cryptocurrency is you buy when someone else buys. That someone could be your best friend, your colleague, your spouse, or that Twitter influencer that you admire.

Blindly following someone else in buying cryptocurrency might not be a good idea. Because everyone’s objectives and strategies could be different. Even if the objectives and strategies could be similar, the holding power and financial situation could be different.

Thus, buy according to your own unique situation.

4. You follow the crowds (blindly)

When the Bitcoin price was rising high in early 2021, Bitcoin news is everywhere. I saw posts and tweets on social media with the print screen of freshly bought cryptos.

But, do you know it can be risky following the crowds buying Bitcoin at a high price?

Personally, whenever possible, I hold on to Warren Buffett’s quote.

Be fearful when others are greedy, be greedy when others are fearful.

Warren Buffett

I know it is easier said than done. But I learned that this is an effective crypto investing strategy.

My additional tips are don’t be too greedy and find out the actual fear.

5. You use an unauthorized crypto exchange

In Malaysia, digital assets such as crypto exchanges are regulated by the Securities Commission Malaysia (SC). This means SC has the right to suspend any crypto exchanges not registered with SC from operating in the country.

I had a personal experience with this. In 2017, I registered a Remitano account. At that time, there were no clear regulations for digital assets in Malaysia.

In 2020, I noticed Remitano was on the SC investor alert list. Fast forward to April 2021, SC reprimanded Remitano and later blocked access to the Remitano website and Remitano app.

Media release of Securities Commission Malaysia reprimands Remitano and block access to its website is an example of cryptocurrency investing mistakes
SC reprimands Remitano Malaysia

As a result, I can’t log in to both the Remitano website and the app. Fortunately, I only have very minimal crypto left in my Remitano account.

Let’s say you registered and buy 0.1 Bitcoin from an SC unauthorised crypto exchange. Suddenly, you are getting an error message when you try accessing the crypto exchange website or app.

When you can’t get access to your crypto account, you can’t sell your Bitcoin in that crypto wallet even if the Bitcoin price reaches an all-time high.

Thus, when you buy and keep your crypto at SC unauthorized crypto exchanges, you are putting your crypto investment at risk.

For this, I would strongly advise you to only sign up with crypto exchanges approved by SC.

Prevent cryptocurrency investing mistakes by using crypto exchanges registered with Securities Commission Malaysia namely Luno Malaysia, Sinegy Technologies and Tokenize Technology.
Crypto exchanges registered SC Malaysia

When you use crypto exchanges approved by SC, you reduce some of the risks of your crypto investment.

6. You didn’t keep a record of your crypto transactions

I started keeping a record of my crypto transaction from my first Bitcoin purchase in 2017.

My crypto transaction record consists of:

  • the transaction date
  • type of transaction (whether buy or sale or transfer)
  • crypto buy price
  • buy amount in local currency (RM)
  • buy amount in the crypto unit
  • crypto sold price
  • sold amount in local currency (RM)
  • sold amount in the crypto unit

In fact, you still can refer back to all the transactions in your crypto wallets without creating your own crypto transaction record.

But it will be messy. Especially if you had completed many crypto transactions using different crypto exchanges.

Personally, keeping a proper crypto record allows me to plan and execute my crypto investment strategy blissfully. That’s because all my crypto information is in one place.

Without proper records, it is going to be time-consuming to retrieve the exact buy price. And I won’t know the next target price to sell my crypto for profit (if I want).

Currently, I am using a simple spreadsheet dedicated to my crypto transactions.

A simple spreadsheet showing the header of Bitcoin transaction record such as buy date, buy price, buy amount and the fees.
A sample of my Bitcoin transaction records

If you haven’t got a record of your crypto transactions, it is time to consider having one for yourself.

7. You don’t know how to secure your crypto

Do you know that not knowing how to secure your crypto is also a common cryptocurrency investing mistake? Since crypto is a digital asset, everything related to crypto is handled digitally, including its storage.

As a crypto holder, learning to secure your digital assets can reduce the risk of digital assets.

Some of the measures you can take to secure your crypto are:

  • Do not share your crypto exchange credentials (email address, username, password) with anyone.
  • Use a strong password and change your password frequently.
  • Avoid using public wifi but only use a secure internet connection when accessing or making a crypto transaction.
  • Consider investing in a trusted hardware wallet.
  • Ensure your devices have the latest software updates and virus definitions.
  • Always opt to set up two-factor authentication (2FA) for the crypto wallets, emails, and social media accounts.
  • Do not click on suspicious links on your devices.

Other than the above measures, do keep yourself up-to-date with the latest cryptocurrency security news.

8. You think you can make immediate money

Often, I see crypto investors on social media complaining that the Bitcoin price plummeted right after they bought some Bitcoin.

I heard the same thing from my husband. He bought Litecoin at about RM886 per LTC. But two weeks later, Litecoin dropped to RM740 per LTC.

As for me, the majority of my crypto purchases resulted in a price dropped within a few weeks or months after I made the purchase. Over time, I learned that I have a better opportunity for a positive crypto investment if I hold my crypto long enough.

Therefore, never have the perception that you can always make immediate money from the crypto investment.

9. You don’t have clear crypto investment goals

Do you have clear crypto investment goals?

From my experience, setting a solid crypto investment goal provides me with clear direction and keeps me focused. Besides, setting a solid goal also motivates me when the crypto market is bullish.

Some examples of crypto investment goals are as below:

  • to own 1 Bitcoin (because there are only going to be 21 million Bitcoin in circulation)
  • investing RM100 in Bitcoin every month
  • investing in a new cryptocurrency every 3 months

If you haven’t got your crypto investing goals, try setting up some goals based on your own preferences.

10. You don’t have a crypto investment strategy

How about a crypto investment strategy? If you don’t have any, that is also one of the common cryptocurrency investing mistakes.

Because having a crypto investment strategy gives you a much better chance of making a significant profit from your crypto investment.

For this, you might want to have a look at my other post on my Bitcoin investment strategy.

In my opinion, you don’t have to follow others’ crypto investment strategies. That is because everyone’s situation and expectations are different.

But, it is a good idea to know different crypto investment strategies out there. So that you can modify and adjust the crypto investment strategy to suit your own needs.

11. You keep your crypto at the exchange without knowing the risks

Do you know why experienced crypto holders prefer to transfer their coins to a private wallet instead of keeping their coins at the exchange?

These are some of the reasons:

  • high hacking risks
  • lack of ownership because you don’t own the private key
  • largely unregulated

If you value your coins, it is not recommended to keep your coins at the exchange unless you know what you are doing.

12. You didn’t take profits

As the crypto prices such as Bitcoin rise, it is common for a Bitcoin holder to wait for it to rise higher.

When the Bitcoin price starts falling, the Bitcoin holder might wait for the Bitcoin price to rise again. But, sometimes, it can take years for the Bitcoin price to reach another all-time high.

So, along the way, you might want considering to take some profits. But again, it depends on your crypto investing goal and strategy.

13. You don’t have sufficient holding power

If you don’t have sufficient holding power, be prepared for sleepless nights when the crypto prices crash. You can’t sleep because you are so worried that the crypto prices keep crashing and leaving you with little value.

To have sufficient holding power, only invest the amount you can afford to lose.

For this, you might be interested in reading my other post on Investing in cryptocurrency for a beginner.

14. You think you can time the market

We all want to buy when the crypto is at a lower price and sell it at a higher price for a profit. The main problem is no one knows when the market will hit a lower price or higher price.

I realized that there are times while waiting for the buying opportunity, and I ended up buying at a much higher price. You can see and learn from some of my crypto purchases in my other post on the right time to buy crypto.

Now I keep myself updated with crypto news and follow the trend from there.

15. You invest in one lump sum

Depending on the situation, it might be better to separate the crypto purchase into a few batches.

For example, you want to buy RM1,000 worth of Bitcoin when the Bitcoin price is falling. Instead of buying in one lump sum, consider separating your purchases.

When you invest in batches, you could be getting a lower average buy price. But, do take note of the risk if the Bitcoin price is going up, you could be getting a higher average buy price.

But again, at least you know the options that you have.

16. You didn’t diversify your crypto portfolio

Now and then, new crypto emerges.

Some coin comes with better efficiency such as Litecoin or is more scaleable such as Cardano. Diversifying your crypto portfolio could better adjust your risks and maximize your potential rewards.

Personally, I didn’t diversify my portfolio until April 2021. The main reason was that I didn’t think I have sufficient knowledge about crypto other than Bitcoin. Once I feel more comfortable, I started to own some altcoins, namely Ethereum, Ripple, and Litecoin.

17. You bought the wrong coin

Do you know how many cryptocurrencies are there? There are thousands of coins with more and more new coins added in. You can refer to the cryptocurrency list on CoinMarketCap.

Therefore, be careful, don’t buy the wrong coin. Some of these coins are Ponzi schemes.

18. You didn’t take the time to study the crypto

Another common cryptocurrency investing mistake is you didn’t the take time to study the crypto.

As for me, I took the time to read and understand specific crypto before investing in it. I prefer to be a late crypto owner than own the wrong coin.

19. You didn’t follow crypto news

As a crypto investor, do you follow cryptocurrency news? You should. Because the cryptocurrency market is ever-changing.

But who has the time to follow every piece of crypto news?

Personally, I follow a few preferred youtube channels that mostly share important crypto news that could impact the crypto space.

Do you have any specific crypto news channels you would like to recommend? Please leave a comment under this post.

20. You only read the good things about crypto

Do you only search and read all the good and merry things about crypto?

I don’t. I read both good and bad news about crypto.

Because knowing the negative news improves my overall knowledge about cryptocurrency. And these help me make better crypto investment decisions.

21. You think no one can influence crypto prices

I am not surprised. Someone prominent might have the power in influencing the crypto market price.

One of them is Elon Musk. With more than 89 millions follower on Twitter, his Bitcoin tweets have some influencing power.

Around mid of May 2021, Elon Musk sent a tweet mentioning Tesla will no longer accept Bitcoin over climate concerns. Bitcoin fell by more than 10% after the tweet.

About two weeks later, he sent another tweet that he spoke with North American Bitcoin miners. Bitcoin price rises again.

Thus, some people can actually influence crypto prices.

22. You underestimate the impact of fees and service charges

Do you know the fees and service charges you are paying when you perform your cryptocurrency transactions?

Here is a list of some common fees and service charges associated with cryptocurrency:

  • currency deposit fees
  • currency withdrawal fees
  • trade fees
  • crypto deposit fees (usually free of charge)
  • crypto withdrawal fees

Some exchanges are offering flat fees but some are charging dynamic fees. Dynamic fees depend on the traffic of a particular cryptocurrency network. Generally, when there is more traffic, the fee is larger and when the is less traffic, the fee is smaller.

Crypto exchange such as Luno displays a screen with the service charge before you confirm the transaction. Refer to the screenshot below.

Order confirmation screen of buying Ethereum on Luno Malaysia with service charge of 2% shown.
Luno Malaysia showing service charges through Instant Buy

Thus, it is always a good idea to check the fees before performing any transactions.

Other than that, try not to repeat buy and sell within a short period of time without factoring in the fees and service charges involved.

The same applies if you want to transfer your crypto from one exchange to another exchange or another crypto wallet.

23. You deposit funds from a third-party bank account

If you are using crypto exchanges approved by SC, you are only allowed to deposit from your own bank account. And make sure the bank account name is the same as the crypto account holder’s name.

Back in February 2021, my husband accidentally made his first deposit to Luno Malaysia from his business account. He only got back his wrong deposit about one week later. And there is a charge of RM0.50 for the refund procedure.

Luno Malaysia's reminder to make a deposit from own bank account.
Reminder to deposit from own bank account from Luno Malaysia

Thus, it is important to check the terms and conditions before making your first deposit to your preferred crypto exchange.

24. You rely on one crypto exchange

Do you only have one crypto account? You might want to consider having multiple crypto exchanges.

These are potential benefits:

  • reducing your risks by keeping your crypto at separate exchanges
  • take advantage of different crypto prices and fees structure from different exchanges
  • if one exchange has a problem, you still can make the transaction through another exchange
  • some exchanges might have limited coins available

Currently, signing up and opening a crypto account at the majority of exchanges is free of charge. If you only have one crypto account, you might want to consider looking for and registering for a new crypto service.

25. You underestimate the power of referral programs

From my observation, the majority of crypto exchanges have a referral program. This is where an existing user receives an incentive when he refers new users to the platform.

And to encourage a new user to sign up, usually, the new user also receives an incentive.

For example, through Luno Malaysia Refer A Friend program, my friend and me both receive up to RM75 worth of Bitcoin when my friend signs up for Luno through my Luno invite code.

Luno Malaysia referral program with invite code PAWHVW worth RM25 in Bitcoin for both referral and referee.
My Luno Malaysia Invite A Friend code

Imagine how much free Bitcoin you will receive when you spread the news to your friends and family.

26. You are not aware of the crypto platform’s new user promotion

Lastly, do you know many crypto exchanges are actually offering generous incentives for new users?

One of them is Luno Malaysia. I shared how a new Luno Malaysia user is eligible for free Bitcoin worth RM75 in my other post on the Luno Malaysia review. You’ll find my Luno promo codes in that post.

If you are not aware of the promotions, you missed out on the opportunity to earn free cryptos.

So, remember to check out similar promotions before signing up for a crypto exchange.

Final thoughts

With the above, I hope you are more aware of the common cryptocurrency investing mistakes and how to avoid them.

As cryptocurrency is such a unique digital asset, I foresee I will still bump into new experiences and mistakes. When that happens, I shall update the new cryptocurrency investing mistakes in this post.

What about you? What is your biggest cryptocurrency investing mistake? I want to know. Please share your valuable crypto experience by leaving a comment below.

Image Credits

Featured Image by Miloslav Hamřík from Pixabay
All Screenshots were taken by the author

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