f you’re new to investing in cryptocurrencies, you must know about the five biggest and most common mistakes. In this article, we will show you how to avoid the five most lethal landmines in the expansive world of Web3. Whether you’re new or experienced, this short article could teach you something valuable. Learning is a never-ending process.

Although it can be good to make and learn from our mistakes, some are just too big, you need to prevent them from happening in the first place.

So, if you want to start investing in cryptocurrencies, here are five hot errors to try and avoid:

1. Insufficient Knowledge/Research

While investing in cryptocurrencies can be fun and exciting, we all know they come with various risks such as hacks, rug pulls and false news.

Investing in cryptocurrencies isn’t as simple as buying, holding and selling. Investors are accountable for all of their crypto investments in the world of DeFi, you are responsible for everything you own. This is why it’s extremely important to Do Your Own Research (DYOR) before you invest in any cryptocurrency.

You must have a clear understanding of how blockchain technology works. If you don’t, you can set yourself up for many bad investments due to a lack of knowledge and research. If you plan on sticking around, learn everything there is to know and get to know all the lingo like DYOR, NFA, FOMO etc.

DYOR (Do Your Own Research) Crypto Bitcoin (BTC)
Do Your Own Research (DYOR)

2. Portfolio Diversity

Ying and Yang work in all aspects of life, especially when it comes to your Crypto Portfolio. Having too much invested into a single cryptocurrency holds more risk and less opportunity. In the world of finance, there is a famous saying, “Don’t put all your eggs in one basket.”

Don’t overdo it either. It is also possible to go the other way and invest in too many cryptocurrencies where your spread of investments is too thin. It’s all about finding the perfect balance, Ying and Yang.

Diversify Crypto Portfolio Coins Crypto Tokens
Diversify Your Crypto Portfolio

3. Seed Phrase Security

Your keys, your responsibility. The Seed Phrase (Private Keys) to your wallet is the most important thing you hold.

Sadly, in the crypto landscape, there are many hackers, scams and phishing methods. One thing we need to prioritise is the practice of keeping your seed phrase as secure as possible. Here are some common practices to keep your Private Keys secure and stay safe in this daunting space:

  • Write your Seed Phrase on a piece of paper/metal sheet
  • Store your Seed Phrase somewhere hidden and safe
  • NEVER store your Seed Phrase online or on any digital device
  • NEVER give your Seed Phrase to anyone
  • NEVER click on unknown or suspicious links
  • Triple check you’re on the correct websites
  • Don’t trust anyone you don’t know

No one can guarantee the safety of your seed phrase or wallet, you are entirely responsible for all of your assets.

Seed Phrase/Private Key Security Cryptocurrencies Crypto Wallet Seed Phrase
Seed Phrase Security

4. Emotional Investing

Can you guess the two most destructive emotions you can possess when it comes to investing in cryptocurrencies?

That’s right, it’s Fear and Greed. These two incredibly powerful emotions can destroy your crypto portfolio if you don’t know how to manage them. We’re all human, we all have these emotions but we can control them to work in our favour.

Cryptocurrencies are extremely volatile assets that can shoot up 10,000% in a day or drop 100% in half a second. Don’t panic buy into anything just because someone told you “it’s the next big crypto” and don’t panic sell because someone told you potentially fake news, also known as FUD (Fear Uncertainty and Doubt). Everyone is required to put their emotions to one side and make decisions purely from their research (DYOR).

Emotional Investing into Cryptocurrencies | Bitcoin BTC Ethereum ETH XRP Cardano ADA Solana SOL
Emotional Investing into Cryptocurrencies

5. Trading Crypto with Leverage

Leverage Trading cryptocurrencies without the correct knowledge, experience and risk-management strategies is a recipe for disaster. Professional or experienced traders can use leverage to enhance their profits from their original investments. These veteran traders practice risk-management strategies to minimise losses and maximise profits.

The simplest explanation is that when you are ‘Leveraging’, you are using borrowed capital/funds to make your trades so that you can increase your profits, as much as possible which allows you to trade with fiat you don’t necessarily have. Before you can borrow capital and start Leverage Trading, it is required to have initial capital that is deposited into your account, which is also referred to as collateral.

Inexperienced and newbie traders should stay very far away from trading crypto with leverage.

Trading Crypto With Leverage | Bitcoin (BTC)  Leverage Trading, How to leverage trade Bitcoin (BTC)
Leverage Trading

Final Thoughts

While there are many more mistakes that new investors tend to make, these are the top five we believe investors should be aware of. Even the most experienced investors and traders can fall victim to these common errors. Tread carefully at all times, cross-check your website links, don’t trust anyone on the internet, don’t give into your emotions and always do your research (DYOR) before you invest anything!


The content provided in this article is strictly intended for informational purposes. Nothing said in this article is financial advice. It is important to proceed with caution and diligence when using cryptocurrencies. Always invest what you are prepared to lose and remember that you are entirely responsible for your assets and investments. The author and the publication do not endorse or recommend any of the cryptocurrencies, protocols or strategies in this article.

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