Cryptocurrency is an emerging industry that has experienced recent rapid growth. Due to the industry’s young age, and the uncertainty surrounding the future of online currency, the crypto market can sometimes be volatile.
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Many people have jumped on the crypto bandwagon and choose to invest because it is both trendy and flashy, and this leads to some uninformed investors losing money on their investments.
According to Forbes Magazine, only 13% of surveyed crypto investors have said they’ve broke even. Adding to this, only 28% of investors are claiming they made a profit off of their investments.
Only a small amount of investors are profiting off of their crypto stock. This begs the question: What mistakes are stopping crypto investors from getting rich?
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1. Investing Emotionally
A problem that cryptocurrency faces as a new, oftentimes sensationalized investment opportunity is being overhyped.
“One of the major challenges is the psychological factor where the investor has an affinity with the investments,” said Daniel Krupka, chief research officer at Coin Bureau, a website that specializes in cryptocurrency trends and investment advice.
Novice crypto investors may invest when prices surge and certain currencies trend.
“This is because when trading, emotions such as fear, greed and overconfidence take over and this makes investors not act rationally,” Krupka said.
Factors such as celebrity endorsements or news coverage may lead to the act of investing emotionally. Investors may potentially be losing out on money by making decisions based on their current emotions, rather than shifting their perspective to the long-term.
2. Ignoring Market Trends
Wilfully choosing to ignore the trends of the crypto market is what leads to the downfall of many investors. Oftentimes, crypto investors are fixated on their own expectations and goals for themselves.
“The market has no regard for personal objectives and functions based on its own logic,” Krupka said. “[Recognizing these] signals are important in successful investing but they need technical analysis to be understood well.”
When too focused on personal goals, it is difficult to see the bigger picture and use external factors, such as real-time market updates and trends, that can help guide investors into making smart decisions.
By staying up to date on market trends, crypto investors are diminishing their chances of making costly mistakes.
3. Not Enough Research
With our current ability to communicate using social media sites such as Reddit and YouTube, it is easy for misinformation to spread and out of date investment strategies to circulate.
Some crypto investors take the words of influencers or celebrity endorsers as the absolute truth without doing research on their own time.
“Cryptocurrency investment is all about learning and planning to achieve the best results,” Krupka said. “To be able to comprehend and predict the market trends, investors have to learn about the various strategies in market analysis.”
As is the case in crypto, many people wish to ride the hype without doing their personal research on what investments may pay off in the long run. By doing their due diligence, crypto investors can work to make informed investment decisions and potentially become rich.
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This article originally appeared on GOBankingRates.com: I’m a Crypto Expert: 3 Biggest Mistakes Stopping Crypto Investors From Getting Rich
