Cryptocurrency investing can be thrilling, potentially rewarding, and, for many, completely overwhelming. While stories of overnight success are all over social media, the reality is that the world of crypto is fast-moving, highly volatile, and not always forgiving. For beginners especially, it’s easy to get caught up in the hype and make costly errors.
Before diving in, it’s wise to learn from the missteps of others. Here are ten common mistakes new crypto investors make — and how to avoid them.
1. Jumping in Without Research
The lure of fast profits often leads people to buy whatever coin is trending without understanding what it actually does. FOMO (Fear of Missing Out) can cloud judgement. Always research a project’s purpose, team, technology, and long-term viability before investing.
2. Ignoring Wallet Security
Keeping your crypto on an exchange might be convenient, but it’s risky. Exchanges can be hacked, and accounts can be frozen. Many new investors also neglect to set up two-factor authentication or secure their private keys. Using a reputable wallet—especially a hardware wallet—offers far better security.
3. Falling for Scams and Rug Pulls
Crypto is a playground for scammers. From fake airdrops and phishing links to dodgy projects that disappear overnight, it’s easy to get caught out. Always verify sources, double-check URLs, and be sceptical of anything that sounds too good to be true.
4. Investing More Than They Can Afford to Lose
Crypto is incredibly volatile. Prices can swing wildly in a matter of hours. New investors often get caught up in the excitement and invest money they can’t afford to lose. Always set a budget and stick to it. Think long-term and only invest what you can comfortably risk.
5. Overtrading or Chasing the Market
Trying to time the market rarely ends well for beginners. Jumping in and out of trades based on hype or panic can quickly drain your funds. Constant trading also racks up fees. Sometimes, the best strategy is simply to hold and wait.
6. Not Understanding Gas Fees or Network Congestion
Every transaction on a blockchain comes with a fee. If you’re moving small amounts, gas fees can eat up most of your funds. Many new users are caught off guard by high fees or delayed transactions due to network congestion. Always check fees before sending crypto.
7. Blindly Following Influencers
Crypto Twitter, YouTube, and TikTok are full of self-proclaimed experts. While some offer valuable insights, many are paid to promote coins or have vested interests. Don’t follow anyone blindly. Use influencers as a starting point, not the final word.
8. Forgetting Taxes and Regulations
In the UK and many other countries, crypto is subject to taxation. Profits from buying and selling can be taxable, and so can mining or staking rewards. Many new investors don’t keep records, only to face issues later. It’s best to stay informed and track everything from the start.
9. Lack of a Clear Strategy
Going in without a plan is a recipe for confusion and stress. Are you investing short-term or long-term? What’s your risk tolerance? When will you take profits? Having a strategy helps you stay disciplined and avoid emotional decisions.
10. Panic Selling During Dips
Crypto is famous for its dramatic dips—and equally dramatic rebounds. New investors often sell at a loss during market crashes, only to see prices bounce back. If you’ve done your research and believe in your investment, it’s usually better to hold steady rather than panic.
Every crypto investor starts somewhere, and mistakes are part of the journey. But with a bit of foresight and preparation, you can avoid the most common traps and start your crypto journey on the right foot.
Stay informed, stay secure, and above all, stay patient. If you found this list helpful, share it with your mates and check out more crypto tips and guides here on The Very Best Top 10.