Investing in the crypto market can be quite profitable if done wisely, but if not careful, investors might lose their hard-earned cash. There are several pitfalls in cryptocurrency investing that an amateur investor should be aware of. Below are some of the pitfalls that you should look out for, when making your first investment into the cryptocurrency market.
1.Investing in a coin that you lack knowledge about
As an amateur investor, it is essential that you only invest in a coin that you have gathered enough information about. For example, if you decide to invest in Bitcoin, make sure that you understand its trading history, where to purchase from, and where to store. Understanding the history of the coin will help you in analyzing its trading pattern; which can come in handy when predicting possible prices in the future, when to buy and when to sell.
2. Scam websites and links
Just like in any other market, the crypto space is also affected by scammers. You should be careful not to buy from fake websites or invest your money in crypto Ponzi schemes. It is important to understand that if you lose your money on a Ponzi scheme, there is no way for you to get any compensation.
Most scams will ask you to send them money or your wallet keys, promising to give you enormous returns on your investment. Once you are asked to share your wallet key, walk away because that’s ultimately a scam.
3. Storing your coins
How to store your coins is very important in cryptocurrency trade. You should not store your coins on exchanges because they are highly susceptible to hacking attempts, in which case massive amounts of money is usually lost. Recently, BitPoint exchange, which is a leading exchange site got hacked, and $32 million, was lost.
Ultimately, trade wisely and desist greed. The cryptocurrency market is volatile; prices fall and rise rapidly causing fear among investors, which results to them making poor investment decisions. The pitfalls in cryptocurrency investing should not discourage you from investing, you just have to be careful.