I bought Bitcoin for the first time in July 2017 when the price was just $750.
It was exactly $50 worth of BTC in a one-on-one transaction with a friend who was trying to get me to invest in one of those popular Bitcoin Ponzi schemes back then.
Remember those 1% to 10% daily reward Bitcoin investment schemes and cloud mining scams? Yeah! We did all that.
I invested the $50 and over a period of 2 months, made a realised profit of over $1,000. I don’t have the exact figure because I kept withdrawing and spending my gains.
It was in the early days of the bull run then and I happened to be early to the said Ponzi scheme platform. So, I had a ton of luck to have come out with nice gains on that first one.
Of course, we played with others that also inevitably crashed and I lost money in a few but as it was a bull run and I was mostly withdrawing my gains, I came out with a significant net profit.
But this experience was a set-up for some bad crypto investment mistakes I was going to make as you’ll see below.
My worst Crypto investment mistakes
1. Started on the wrong note
As you can see from the above story, my first crypto investment mistake was that I started my crypto “investment” journey on the wrong note, as what we were doing was more like gambling than investing.
If I had learned about HODL then and rather bought and held onto my Bitcoins till today, it would have been a lot more profitable.
So, if you coming into crypto with a get-rich-quick mindset, you’ll be setting yourself up for major losses until the market forces you to learn the hard lessons.
If you are just getting started with crypto, invest only in projects you understand WHAT they’re doing and HOW or WHY they will succeed and invest in them for the long term.
Performing a basic fundamental analysis of a project will give you all the information you need to make an informed investment decision.
If you have a sizeable capital and don’t want the trouble of doing research and monitoring multiple projects’ development progress, just buy and hold BTC, ETH and stablecoins.
You can also lend or stake them to earn interest while you wait for their price to increase. Or if you have the risk appetite, use your ETH and stablecoins to farm legit airdrops on reputable protocols.
2. Leverage trading
Oh! how much I have lost to liquidations on BitMex and Binance. If only I wasn’t so greedy! Valued at the current prices of BTC and ETH, I think I have lost more than $100,000 to leverage trading alone.
People demonise leveraged trading and talk about it like it’s something that must be avoided like the coronavirus.
Trading isn’t bad in itself. It’s a legit crypto investment strategy but it requires knowledge, experience, and skill to be successful. Something that normies and crypto newbies don’t have.
Only professional traders and institutions such as banks and market makers are qualified to trade with leverage to stand a chance. These guys know exactly what they’re doing and have sophisticated tools and enough money to continue playing the game.
It’s NOT for the inexperienced newbies who are playing “guess and click” hoping for a quick win with no trading setup or strategy. Even if you win, you’ll lose it all in no time.
Unlike in spot trading where when the price goes down you can continue to HODL until it recovers. You don’t have such a leeway with leverage trading. If you lose, there’s no recovery, it’s gone forever.
Except you have some money to burn just to learn the hard way that you should avoid leverage trading run from it.
But if you want to learn leverage trading and become a professional, then put aside money you’re comfortable losing and see how much you’re able to learn while you lose it fast.
3. Not having a plan or strategy
There are so many ways to make money in crypto that without a predefined plan or strategy, you’ll have a hard time becoming a consistently profitable investor.
When I started crypto fully in early 2020, it was all just to make money through content creation, participating in contests, trading, and chasing the next gem.
However, I wasted too much time and didn’t make satisfactory progress because I wasn’t focused or strategic with my investments.
Remember I had no solid background in crypto, but I am a fast learner and was growing steadily on my own. I caught some real gems early like SWAP, BNB, SOL, INJ, etc. but flipped them too early and missed out on insane gains.
I should have adopted the HODL strategy on my strongest convictions and rotated my degen play (shitcoins) gains into my solid convictions early enough, but I didn’t.
I flipped-flopped everything and never held any of them into the real pump and missed out on the massive gains opportunities.
Also, I was taking out my crypto earnings and gains too often and never really held them to maturity, but no regrets about that because money was meant to be used to solve my problems.
Now, my strategy is shifting more towards holding more BTC and ETH as long-term plays. I use my ETH and stablecoins to farm reputable airdrops or earn yields.
And on the sideline, I have some degen play money for chasing hot new trends and the latest narrative plays like SocialFi and anything else where the money is flowing.
Generally, I want to be in the least volatile assets and use them to generate passive income or farm airdrops to compound my wealth. The rest, I will continue to trade and take profit into my blue chips (ETH, BTC, Stablecoins).
In the end, I want to be able to live a normal lifestyle off on the returns from my investments while preserving and growing my original capital.
So help me God! 🙏 🙂
But remember, the strategy that works for one person may not work for you. So, you must design your own based on your unique circumstances and goals.
4. Poor profit-taking practices
During the 2021 bull run, I turned $350 in one of my investments on the BSC chain to $9,500+ in under 3 months through farming and auto-compounding.
I knew it was time to take profit and call it quits with that trade, but the greed in me said why not wait for it to reach $10,000 before selling? I agreed.
And that’s when the dump started. I later sold and exited with $5,500, losing $4k of hard-earned profit. The token was later dumped to zero over about 2 months afterwards.
I have always made great calls. Almost every token I have bought has had a nice run with at least 50% to >10x profit within 2 days to 2 months.
However, I have always sold too early or too late by not having and sticking to a predefined profit-taking strategy.
5. Not cutting my losses soon enough
If we all make correct trade or investment calls all the time, we’ll all be billionaires now. But we don’t and that’s perfectly normal.
What’s not normal is refusing to cut your losses and moving on when you realise that you were wrong. Your analysis was wrong, you made a bad judgment call, and you’re now down 50%.
Sell and preserve what’s left of your capital before it goes to zero. I did this even recently with Autotrononic (ATRN), Alienbase (ALB), and FRIENDX.
But they were all win-or-die shitcoin bets and I’m still keeping them running both to farm airdrop on the chains or see what will eventually become their end or epic success story.
For normal investments, you must learn to cut your losses immediately after you realise that your analysis was faulty and your investment decision was wrong.
6. Buying the dip too early
After the second Stars Arena hack, I decided I was going to take my original capital with some profit off the market and just hold the rest in Tickets.
I sold and realised that. After a 50% dip, I thought this was an opportunity to buy back the tickets at lower prices. I was wrong!
The FUD on the platform increased multiplefold and caused everything to dump a further 60% to 80% and I lost it all. I hope it recovers though as I still hold some of the Tickets.
When you sell and take profit, don’t buy the first or even the second wave of the dip that follows. Wait and hold onto your capital for as long as it takes to get a major discount.
If the fundamentals are still intact, wait until it seems there’s no hope for the price to recover, that’s when you should make your first buyback with maybe 10% to 20% of the money you took out earlier.
If it continues to dip, you can DCA down. But if it pumps from there, then you ride it all the way with whatever you’ve bought back and keep the remaining capital as dry powder for new opportunities.
There’ll always be new and better trades, don’t rush into putting all your capital in the market. Always have some dry powder to seize new opportunities.
7. Investing based on hope and faith
This is a personal problem that I’m still trying to manage. I’m prone to believing too much in people or things. Probably naive. But I’m actively pruning this tendency.
When the only thing keeping you invested in a project is NOT reliable information or facts but “belief” and “hope”, you’re setting yourself up for unnecessary disappointment.
But there are times, when things get so uncertain and it becomes very hard to tell if survival is possible, like the recent case of Stars Arena or the Unibot hack.
In such a situation, you should scale down your exposure or exit completely while you wait for clarity or closure. Crypto investment is not a religion. You can’t survive on “faith” alone here.
Take sentiments and emotions out of your crypto investment and you’ll start making better decisions. Embrace the attitude of “it’s nothing personal, just business”.
Common crypto investment mistakes to also avoid
Learn from other people’s crypto investment mistakes and failures. The above are crypto investment mistakes that I have made or currently dealing with.
Now let’s talk about the general crypto mistakes people make so that you can avoid them and increase your chances of success.
You’re so confident in a project that you put your entire portfolio into it, ignoring diversification and basic risk management practices.
No matter how high your conviction about a project is, never go all in. Even the entire crypto market can still go to zero due to some black swan event.
Secure your BTC and ETH and diversify into a few (2 to 10) low to mid-cap altcoins with solid fundamentals that you have high conviction for.
9. Not monitoring your investments
Very few crypto projects survive beyond a few months or one year. In fact, most crypto projects are scams and many will fail naturally within 6 months to 3 years.
It’s important to follow the development progress of every project you’re invested in and periodically reevaluate your investment thesis.
You don’t want to come back after a few months to realise that the “gem” you thought was going to $100 million MC has rugged, got hacked, or dumped to oblivion.
And remember, things change very fast in crypto. If you leave the market too long, the market will leave you behind. Stay current and up to date.
10. Being too trusting
Blindly trusting other people’s judgment or opinion of a project without doing your own due diligence and forming your own opinion is naive.
Influencers are paid to shill to you most of the projects they promote or talk about. In fact, almost everyone in crypto will tell you everything is perfect with a coin or token they’re invested in to attract new investors who will be their exit liquidity.
Not judging anyone here, but this is how it works and you must understand that to stand a chance of surviving or winning.
The point? Nobody is out here looking out for your interest even half as much as you do.
You and you alone are responsible for the outcome of your crypto investment decisions. You can study and learn from others but you must always come to your own conclusions and own your decisions.
Remember, in crypto, the motto is: “Trust, but verify”.
11. Not being security conscious enough
It’s easy to lose all your crypto assets to some cheap phishing or social engineering scams, not properly securing your secret recovery phrase or private keys, etc.
- Avoid interacting with unverified, unaudited, and unfamiliar contracts and websites, especially with your main wallet. Learn to test new protocols with new wallets.
- Separate your long-term crypto investments wallet from your degen plays or airdrop farming wallets. Maintain multiple wallets and keep all your private keys safe in separate places.
- Be careful with the protocols you interact with and the kind of token approvals you sign. There are many wallet drainers out there and you’re one transaction away from getting the coins in your wallet stolen.
- Use reputable wallets like Rabby that give detailed information on the approval requests and the security level of the contract you’re interacting with before you sign them.
- Double-check every transaction before signing them because once your crypto is sent, the transaction cannot be reversed as the banks do.
Remember, in crypto, you’re your own bank. The security of your assets is solely on you. You’re the bank manager, the NDIC, and the central bank of your crypto assets.
Most of us early adopters started our crypto journey with no one there to hold our hand and help us avoid the many landmines in this jungle.
So, we learned by trying and failing so that we can give you an edge by helping you avoid the most common pitfalls and showing the path of less risk or higher success.
But don’t beat yourself up when you make some of these or other mistakes. Everyone makes mistakes, even the so-called gurus.
But you must be able to identify your mistakes, analyse what caused them and try to never repeat them. In fact, they give you experiences you can use to make outsized gains in the future.
For example, you can use a $100 crypto mistake to make $1,000 if you learned the lessons it taught you and apply it in future trades.
What crypto investment mistakes have you found yourself making?