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Podcast 🎤 #15 Mistakes Crypto Investors Learn The Hard Way

Since 2013 I’ve watched my friends make the same crypto mistakes over and over again. Let’s go through the biggest mistakes crypto investors learn the hard way.

#10 Not Having Any BTC/ETH Because It’s “Too Expensive”

You can own a piece of a bitcoin and/or a piece of an ether! And you should. You don’t need to buy an entire coin. In fact, they should makeup the majority of your portfolio regardless of size of your stack. Just because a coin is “cheap” doesn’t mean it has more room to go up. The top coins are expensive for a reason, they’re going up.

What’s important to remember is not the price of the coin, but the price times the number of coins issued. That gives you the market cap and you can use market caps to compare coins to one another ~ not price.

#9 Gambling On Shitcoins

What problem does the coin solve? Is it just a copy cat with a cool name? Shitcoins typically have great marketing but nothing special about the technology or use case. When you buy shitcoins, you’re gambling more than you’re investing.

#8 Thinking You’re A Genius Because You Got Lucky A Few Times

So you got lucky a few times and now you think you’re God’s gift to investing? Think again. In fact, this greed and confidence will likely cause you to overcommit to your next investment which will inevitably not go as well.

#7 Blindly Following Influencers

If your reason for buying XYZ coin is because CryptoYouTubeDude said so, you should reconsider. If you can’t clearly articulate why you’re making the investment you probably shouldn’t make it. Influencers are typically just promoting coins they own because they want to see them go up. Or worse, they’re being paid to promote it. Do your homework.

#6 Using Hot Wallets And Sketchy Exchanges

Don’t let the cost of a hardware wallet or the ease of using some sketchy exchange from another country cause you to make dumb mistakes. Make security a priority and always use a hardware wallet and top exchanges.

#5 Not Dollar Cost Averaging

I get it, you probably just did a ton of research on some coin and you’re ready to dump your life savings into it immediately because some magical announcement is coming any moment and you need to buy now. You can buy now, just make it a small chunk ~ not the whole thing.

For example, if you want to buy $10k of a coin, break it into 5 chunks and buy $2k now to get the FOMO monkey off your back. Then, look at the chart and place four more buy orders in at support levels below the current price. Most likely you’ll wake up one day with a bag of coins at the lowest possible price. And if the price runs up you can always adjust your limit orders up accordingly.

#4 Thinking You Can Get Rich Quick

The universe doesn’t allow you to skip steps. There’s a crypto saying I like which says:

  • Your first cycle you lose everything gambling
  • Your second cycle you do better but forget to sell and ride it all the way down
  • Your third cycle you capture it

A cycle lasts 4 years. Take your time. Do your homework. Your time will come.

#3 Not Considering Taxes

Capturing short term gains means paying income tax rates as high as 40% vs long term capital gains rates at 20%. That means if you bought BTC @ $10k and it 6x in 11 months that $60k would be worth $36k after 40% short term gains taxes. However, if that same BTC @ $10k only goes up 5x but you sell it after 366 days, that $50k would be worth $40k on a much lower gain!

#2 Trading vs Investing

Are you a professional trader? Can you compete with high frequency computer algorithms and sophisticated backtesting models? My guess is you can’t. However, do you believe that crypto will replace centrally controlled government money over the long term? Don’t play a game you can’t win at. Invest for the long term in a proven thing.

#1 Not Taking Any Profit

One of the most common things I hear from crypto investors who entered the markets for the first time during the last cycle is they regret not taking some profits. Almost all of them rode their portfolio all the way down to nothing, in some cases 50x gains turned into a loss. Don’t let that happen to you. Set a goal, capture your goal, and accomplish your dreams. You don’t have to sell all your crypto to win!

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