Cryptocurrency ─ The Global Financial Markets continue to experience a downtrend resulting from the tightening monetary and fiscal policies being implemented by global economies worldwide. In addition, geopolitical factors such as the disruption of the global supply chain, the effect of lockdowns, and the ongoing war in Ukraine add to the pressure and uncertainty of the future and inadvertently create an atmosphere of a dull economic prospect.

The cryptocurrency market, in particular, saw one of its biggest losses since it became mainstream less than a decade ago. Prior to this year’s massive loss across the crypto market, the space became known for being a hub for extreme speculation and quick fortune-making by investing in trending coins and tokens. For some, Crypto made their wildest dreams come true, yet for many, it became their worst nightmare, especially for those caught off guard during the massive collapse this year. 

Thus, let’s explore some of the costliest mistakes you should avoid during this turbulent time in what many consider the new era of “crypto winter.”

Mistakes that Could Ruin your Finances

• Investing Before Doing your Due-Diligence

Investing in something without doing your research is a catastrophe waiting to happen. This is especially true with Crypto, as it is currently not a regulated market. Thus, most coins and tokens are highly speculative. Your hard-earned money could disappear into thin air in just a few seconds ─ leaving you on the verge of financial ruin, as many investors came to learn the hard way.

• Over leveraging beyond your Risk Tolerance

Many investors, especially those new to Crypto, are susceptible to this. Do not disregard the risk and just look at the “What if” that blinds many people when they see that they could buy more/ overleverage into a particular coin and token by multiples of their current purchasing power. Always remember, the higher the possible return, the higher the risk that comes with it.

• Not Planning your Exit

Never invest in a coin or token without first identifying your exit conditions. It is paramount that you cut your losses when your investment does not materialize. Remember that “Hope” is not a strategy; thus, if a coin reaches your cut loss point, always sell. The opposite is also true; if the coin or token reaches your target price, don’t be too greedy and be blinded by the additional possible upside of you holding on. Instead, sell at least a portion of it to secure some of your profits.

• Following the Hype and FOMO

Realize that the “Fear of Missing Out” could lead to impulsive and emotionally driven investing decisions that could lead to a disastrous outcome. Never base your investment decision on the current market hype and what is “cool” and “trendy” tokens and coins to invest in. Instead, take a back seat, look at it in the big picture and evaluate if it is worth the hype or if it is a waste of time you are better off disregarding. A big consideration to keep in mind is that these “hyped” coins and tokens are very volatile and could swing in price significantly in a short time.

• Allocating a significant portion of your income into Crypto

Lastly, always be prudent and realize that you must diversify your investment into other asset classes to minimize your market risk in one set of investments, such as cryptocurrency. This will prevent you from wiping your entire account if the whole market moves significantly against your position.

Final Note  

Avoiding these five costly mistakes will not only save you money when things go out of control, but it will also make you a wiser and more prudent investor that looks at crypto coins and tokens through a more objective lens that filters out the things that give you the lowest return while putting you at risk of total financial ruin.