The volatility of cryptocurrencies is very high. Along with this, there are also opportunities to earn and lose money in them. If you are investing on a celebrity’s tweet or following the advice of someone who claims to be an expert, you could be at a loss. Here are some of the mistakes you should avoid when investing in cryptocurrencies.
Do not rely completely on the advice of experts, your research is also important
You will find advice from crypto experts on many online sites. You might be surprised to know that there are no real crypto experts. The volatility of cryptocurrencies is very high and their prices cannot be predicted accurately. For this reason you should do your own research.
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Avoid cryptocurrencies with low liquidity
Cryptocurrencies can be easily bought or sold only when the liquidity is high. If a cryptocurrency has low liquidity, you will find it difficult to sell it.
Don’t try to guess the exact time of the market
You may regret not buying bitcoin when the price is $1,000 or not selling it when it is at its peak. You will not benefit from this. Do your research and if you think a crypto is undervalued then buy it and sell it if it is high value.
Avoid derivatives when you are not aware
Derivatives are financial instruments that draw value from an asset such as interest rates, crypto prices. A common type of derivatives are futures and options. However, if you do not have complete information about it, you may have to bear the loss.
Buy NFT only after getting exclusive rights
Non-fungible tokens (NFTs) have gained popularity in recent months. There have been reports of some of these being sold at high prices. It would be wise to stay away from this greed. Buy them only if you are given some exclusive rights.
Avoid Shorting Bitcoin
Short selling is done when you believe that its price will fall. Never short bitcoins.
Don’t leave crypto on the exchange
When you hold crypto on a centralized exchange, you really have no control over it. If the exchange gets hacked or its owners disappear all your crypto will be gone. For this reason, store crypto in your wallets, paper, hardware or software.
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