Bitcoin has seen a recent surge in interest, with the price climbing to record-breaking heights before dropping just as quickly. However, with many people excited about the prospect of financial independence and an easy way to get rich quick, you must know what not to do when investing in Bitcoin.
In this blog, I will discuss the most expensive mistakes you can make when investing in Bitcoin.
If you find yourself reading something like this, stop and go back to the beginning. Ask yourself whether you want to make these mistakes because it may be better for you to invest in a different asset at this point in your life.
1. Building an unnecessary amount of wealth into Bitcoin
Look at the progress of this crypto and notice how rapidly Bitcoin price increased from $0.0001 in January 2017 to $17,900 in December 2017. This surge of interest has contributed to a massive amount of speculation regarding the future price of Bitcoin.
As a result, billionaires like Peter Thiel and Mike Novogratz predict that the price of Bitcoin will reach $100,000 within the next four years. On the other hand, Tim Draper says that the current value is just the tip of the iceberg and that it is set to reach $250,000 by 2022.
In my opinion, these are remarkable achievements if they happen. However, anyone looking to build a future for themselves has to keep in mind that Bitcoin’s price is volatile and can surge and crash anytime.
Consider that Bitcoin’s price increased by 1,000% between 2013 and 2014, then dropped by 95% within 12 months. Scary, isn’t it? Just imagine that you put all your money here and suddenly, the market drop! What will happen?
Always have a backup plan!
2. Being fooled into thinking that Bitcoin will make you rich
One of Bitcoin’s biggest issues is that most people don’t fully understand how it works. This is evident because many people think that if they invest early enough, they will become rich overnight.
The truth is that there is no such thing as a get-rich-quick scheme, and investing in Bitcoin is no different.
3. Not taking the time to educate yourself about Bitcoin
When considering an investment, you need to find out as much information as possible, and only then should you make a decision. If you invest without doing your research, it will cost you massive amounts of money in the long run.
The good news is that there is plenty of information for anyone interested in learning about Bitcoin. You can start by reading my recent blog post outlining everything you need to know.
The best thing you can do is educate yourself as much as possible before making any decisions. Your future and your livelihood depend on it.
4. Not knowing what to expect
Bitcoin price has been on a rollercoaster ride since the beginning of 2017. The latest surge had led many people to buy more Bitcoin when it was still relatively cheap, only to be disappointed later.
If you are thinking about investing in cryptocurrency, make sure that you do your research and find the optimal time for purchasing.
5. Buying and selling Bitcoin based on emotional appeal
Many people buy Bitcoin because it resonates with them on a personal level. This is evident from the many emotional posters I see during discussions about Bitcoin. Many people are investing with the intention of making money just to have a lot of money.
They falsely believe that if they have enough money, they will become successful and be happy. However, the reality is that these people have not taken the time to understand what leads to happiness and fulfilment, and they are missing out on a great opportunity to invest in areas that will make them happy in the long run.
6. Not having an emergency fund before investing
It’s always a good idea to have an emergency fund before investing money in anything. The problem with investing in Bitcoin is that it can be even more volatile than the stock market, which could drop by 50% overnight.
In the event of a crash, you will want to have money readily available that you can use for living expenses until the price rises again. You might also want to consider storing your Bitcoins in a different wallet in case the situation gets worse.
When deciding whether or not to invest in Bitcoin, make sure that you educate yourself and plan. Be aware that there are high risks involved with investing in Bitcoin and that it’s a long-term investment for most people.
Do your homework first! Bitcoin is still a relatively new asset, and the future of cryptocurrency is still unknown. Always keep in mind that investing in Bitcoin can be like gambling. You are taking your chances.