Seven capital sins of crypto – or the seven things I wish a knew before I began investing

In crypto, there are some investing mistakes that get done more often than others and, with proper research and some patience, one can learn to somewhat avoid them. However I’m unfortunately not that kind of person and I need to experience mistakes on my own skin and be burned by them in order to fully learn. Below a collection of the ones that burned me the most, some of them are quite common, others you probably wouldn’t expect.

Sin #1 – FOMO buying

Very common in crypto, when you see all green such as in January, you get very tempted of buying everything – above all the coins that are already pumping. While it may sometimes work out well in a strong bull market, most of the times just don’t, above all if you’re buying at an all time high. Resist the urge of buying, and look for another opportunity – or wait for a rebound (may take months, but they almost always happen).

Sin #2 – Panic selling

Selling because everything is going down and you fear the bubble has just burst is not a strategy that will make you rich either. When you start investing, you need to have a strong belief that in the long run crypto is going to be a new standard and a growing demand will make things appreciate. Develop a thick skin sometimes soon in the game and buckle up – it’s going to be a bumpy ride. As a rule of thumb, don’t sell at heavy losses unless you don’t believe in the project you’ve invested anymore.

Sin #3 – Selling too early

This is a mistake somewhat less serious than the one before: you’re selling early but still making a profit, so not awful after all. However, if a coin is pumping for whatever reason, let it pump to decent multipliers before taking profits, and never sell all of your position while it’s going up. The opportunity cost in crypto is just massive. I’ve been victim of this a couple of times and making a quick 10% on your investment while watching it jump up to the moon at 100% profit within the next 24 hours is something that hurts. I’ve unfortunately done this both with VEN and NANO.

Sin #4 – Not selling at all aka greedy AF

If you’ve been burned by sin #3, you’re probably more prone to commit this kind of mistake. When something has gone up 3-5x, always sell at least your initial investment. Don’t get overly greedy: the probabilities that you’re sitting on a 100x coin in the next few days are low, so it’s better to “cash” in some profit and reinvest it in other coins or in the same one after a correction. Point of the game is not having all green on your Blockfolio, but seeing your bitcoin / ethereum / fiat wallets grow. This is a mistake I’ve done with AST – was 4x and ended up selling it a cost in order to preserve the capital and buy it back at a lower price.

Sin #5 – Not diversifying enough

In crypto, a good portfolio would comprise of bitcoin, ethereum and alts, thus betting on the whole crypto ecosystem growth. Bitcoin and alts are usually anti-cyclical (when bitcoin goes up, alts bleed) and ethereum has lately proven to be faster at growing than bitcoin, but still somewhat suffers when bitcoin pumps hard. Not having any bitcoin in your portfolio on the assumption that it gives lower multipliers vs. small cap coins is like betting against bitcoin and that’s bad for two reasons: 1) when bitcoin goes up sharply you only see the negative side of it, that is a Blockfolio bloodbath, and 2) if alts get very attractive prices in sats, you don’t have the necessary liquidity to get in and implement some cost average strategy or get some very good bargains. Another lesson I’ve learned the hard way.

Sin #6 – Spreading your investment on too many coins

Extra diversification is another mistake, however. Being very thinly spread among too many coins makes it difficult to keep track of good and bad performers and impairs your speed of action, a crucial element in this volatile market. Moreover, having portfolios of beyond 20 coins makes it unworthy to take profits (unless you have several million dollars invested) – might be 50% profit as percentage but only a few bucks in value. Such a strategy resembles more an ETF than a properly selected portfolio. Clearly you don’t want an ETF with lots of unpromising projects to be part of it.

Sin #7 – DYOR and take action

Do not listen to other people’s investment suggestions. Sure, gather their info for input; but then do your own research and only invest if you’re confident with the project and the price you’re currently paying for it. But then, once you DYOR, take action and don’t get stuck for paralysis via analysis. I lost a couple of boats (namely WPR and BPT) at below ICO price just because I wasn’t sure they were at rock bottom. After you’ve done your research, swiftly act on it.

Unfortunately, I must plead myself guilty of all the abovementioned sins. They were hard, harmful and costly lessons to learn. However, I believe this was the best money I could spend to learn some valuable, lifelong lessons I’ll talk about in my next article.

Did you like what you read? Leave a comment and tell me more about your own biggest mistakes and what you’ve learned from them.