The 5 Worst Crypto Investing Mistakes That Beginners Must Avoid (From Someone Who's Been There)
The 5 Worst Crypto Investing Mistakes That Beginners Must Avoid (From Someone Who's Been There)
Right now, crypto is bigger than ever. You can smell the opportunity in the air. But where there's a shot at making life-changing money, there's also a real shot at losing everything if you're not careful.
I'm not speaking from some textbook. I'm speaking from the mistakes I've made firsthand.
With tons of new people flooding into crypto—many of whom have never even touched investing before—this is more important than ever.
Today, we're going to talk about five of the worst mistakes I see beginners making all the time (and how you can avoid them). If you stick around to the end, I’ll also share why these lessons matter even more today—while Jerome Powell's Fed keeps the market on lockdown.
There’s more to cover than I can fit here, so a Part 2 is coming soon.
Let's jump straight in:
Mistake #1: Investing Money You Can't Afford to Lose
This one is repeated so often it might sound like a broken record, but it’s the most common mistake I see—and it's the one that traps most people.
You hear it all the time: "Only invest what you can afford to lose." Yet, for many beginners, it’s just words.
The reality is that crypto moves fast. It doesn’t wait for you to adjust, and sometimes, you wake up to find your portfolio has been slashed in half overnight. So, ask yourself this: How much of your money are you willing to lose?
Here’s the exercise:
Take the amount you’re considering investing.
Cut that in half.
If that number makes you feel physically sick, you're too deep.
If the amount you’re investing is money you cannot afford to lose, you’re gambling. You’re not investing. And in crypto, that can be deadly.
Before diving into any crypto investment, you need to have your base covered. That means saving at least three months' worth of living expenses in a safe account that isn’t linked to the crypto market. It’s boring. It’s not flashy. But it’s the only way to make sure you’re financially secure when things get rough.
I've seen good people lose their life savings on platforms like FTX and others that collapsed. Many of them may never see that money again.
The bottom line? Secure your emergency fund before you touch crypto.
Mistake #2: Blindly Following Influencers
Crypto influencers are everywhere. You can’t scroll through Twitter, YouTube, or TikTok without someone claiming that they have the next big thing for you. "Top 3 Altcoins to Make You Rich" or "Why This Hidden Gem Will Explode Next Week!" But what most people don’t realize is that most of these influencers are being paid to hype up these projects.
You think they’re all in on these coins? Think again. Many are paid $10,000–$100,000 to make these videos, and they often have no skin in the game at all. The sad reality is that many of the projects they promote don’t even have working products.
You’re essentially funding someone’s marketing cycle.
The answer? Follow my rule of the 3 T’s before you invest in anything:
Technology: What problem does it solve? Is there real demand for it? Is it solving a real problem, or is it just another copycat?
Tokenomics: How many tokens exist? Who controls them? How are they distributed? If the distribution is too centralized, the project could be at risk.
Team: Who's behind the project? What have they done before? Are they transparent and trustworthy?
Think back to Logan Paul's CryptoZoo. Without a product, without real value, and with shady tokenomics, it was bound to fail.
Before diving into any project, dig deep. Do your own research. And remember, never trust someone else's hype.
Mistake #3: Buying High, Selling Low (FOMO)
This is one of the most painful mistakes I see beginners making. It's simple to understand on paper, but it’s so easy to fall into the trap when emotions take over.
Look at the Dogecoin mania of 2021. People were FOMO'ing in at 70 cents, thinking Dogecoin was going to hit a dollar. It didn’t. Instead, it tanked.
Here’s the fix: When you feel the urge to buy because you’re missing out, that’s your red flag to pause.
Here’s why:
If a coin has already surged by 500%, you’re not early. You're late. You’re chasing after a pumped-up coin, hoping to get lucky. But more often than not, you’re just getting caught up in the hype, and when the hype dies, so does your investment.
Actionable tip: If you're feeling like you're about to chase a green candle, take a step back and wait. Let the dust settle. The market moves in cycles—there will always be new opportunities. But if you’re chasing the hype, you’re probably setting yourself up for a loss.
Mistake #4: Betting Big on New Coins Without a Product
The allure of new coins is strong. They’re fresh. They’re exciting. Everyone loves a good “What if?” moment. What if this new project is the next big thing? But let me tell you: Most of them are not.
New coins are like startups. 90% fail. You wouldn’t throw your savings into a random startup with no product, no revenue, and no proven track record. Same goes for crypto.
A solid project should have at least a Minimum Viable Product (MVP). That means something that works today, not just an idea or whitepaper.
Why this matters: Without a product, you're investing in a dream. And dreams don’t pay out.
Actionable tip: Don’t go for the “next big thing” unless the project has built something real. The price might be tempting, but it’s the product and execution that matter. Stick to coins that have a working product or are building something that can genuinely solve a problem.
Mistake #5: Using Leverage (A Recipe for Disaster)
Leverage sounds great on paper. “Double your position, maximize your profits!” But what they don’t tell you is that leverage also doubles—or triples—your losses.
In 2022, Bitcoin dropped by over 50%. If you were leveraged 2-to-1, you didn’t just lose 50%. You lost everything. Leverage magnifies losses like no other.
When you use leverage, a small drop in price turns into a wipeout. And it doesn’t just hit your wallet. It hits your mental health too. Watching your account balance plummet faster than a freefall is a feeling no one should experience.
Actionable tip: Unless you're a professional investor who has a clear understanding of leverage and the risks involved, avoid it. Protect your capital. Stay in the game long enough, and you’ll have more opportunities. The market will always come back; your capital may not.
Conclusion
Crypto is an amazing opportunity. But it's also ruthless.
If you avoid these five mistakes, you'll be miles ahead of the average newcomer.
Remember: your job is to stay in the game long enough to win.
I'll be dropping Part 2 soon with even more mistakes to avoid, so if you found this valuable, make sure you're following The Daily Dollar.
And if you’re serious about building real wealth in crypto without getting wrecked, you're in the right place.
Talk soon.
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The first rule is already something I follow with stocks. But crypto still feels like another world, and I still have fear. More knowledge, more power. Maybe with more learning, that fear will disappear.
Thank you, Abhaya.