12 Effective Ways to Limit Crypto Investment Losses

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Last updated on October 24th, 2022 at 07:42 am

Since a Floridian man paid 10,000 Bitcoin for two pizzas on May 22, 2010, and entered its first ever in what is called a bull run by breaking $1 in April 2011, the excitement around bitcoin and crypto investment is no match to other assets.

And ever since, the cryptocurrency markets have experienced ups and downs in what investors call bull and bear markets.

While it has become a tradition for it to fall and rise, the time of decline is known to put pressure on some investors who can’t hold for long.

While crypto has thousands of investment opportunities you might want to tap into, how do you minimize losses in the course of your cryptocurrency investment journey?

At the time of putting this article together, the pioneer cryptocurrency (BTC) continues to wabble between $19K to $20K, trading at $19,328.72 on Monday, October 24, 2022 (06:59 a.m), though bitcoin remains the largest crypto by marketcap among hundreds of other cryptos in the market.

Top Cryptocurrency investment advice

Here, we discuss 12 cryptocurrency pieces of advice that you might want to follow to limit losses in Bitcoin investment.

Don’t invest in crypto if you are afraid of losses

Bitcoin has risen to an All-Time High of $68,789.63 in November 2021 before backsliding to less than $20 at the time of updating this article.

It isn’t the first time, in December 2017, it rose to over $19, 000 USD before it plummeted to $12,931.70.

There have been several predictions about bitcoin, specifically, one predicted that it would be worth $50,000 or $100,000 before the end of 2018.

If that had happened, you would have made in profit than could ever imagine. But do you also know that you could lose virtually everything if you invested your entire savings?

What to do: Be patient, monitor the trend, and prepare for losses because it’s a volatile investment. Prepare for gains and losses. Don’t be afraid to take a calculated risk, but don’t risk what you can’t afford to lose.

“The biggest risk is not taking any risk… In a world that’s changing really quickly, the only strategy that is guaranteed to fail is not taking risks”.

Mark Zuckerberg

Dig into cryptocurrency investment platforms

Cryptocurrency market is booming and it has been flooded with a lot of fraudulent bitcoin investment platforms that promise you 20% daily profit on your investment. Investigate how such claimed can be achieved.

Don’t be carried away by their first pay out. Some of them like Bitconnect Lending operate for a short period of time and eventually disappear with your money.

Also Read:  5 Reasons Bitcoin Adoption By Central African Republic May Fail

Though the founder of Satish Kumbhani was indicted for $2.4 Billion Crypto fraud by the U.S Department of Justice, the damage had been done.

Beware of Initial Coin Offering (ICO)

ICOs means Initial Coin Offers, a way of launching a new crypto into the digital market with the aim of getting people onboard.

While there are real ICOs, research has also shown that fraudsters are taking advantage of this to dupe investors.

ICO fraud could happen in two ways, says Larry Johnson, a guest writer at entrepreneur.com:

When criminals create a fake ICO and steal any money investors invested

When hackers impersonate a legitimate ICO firm and lure investors into paying them instead of the legitimate company.

What to do: Do your due diligence on an ICO, ask friends, do personal research before jumping in. Use search string like: “ICO’s name+reviews” into Google or any of your preferred search engine to read honest opinions what people have written about it, not opinions of writers who condemn other products for them to promote theirs.

“Check industry sites like coindesk to verify the legitimacy of a claimed ICO. Don’t fall for hard sell tactics or too good to be true offers”.

Larry

There are some websites you can check whether an ICO has been listed into the cryptocurrency market or not, three of them include

  • CoinMarketCap
  • LiveCoinWatch
  • CoinCap
  • CoinLive

The fact that cryptos are listed, isn’t 100% guarantee that it won’t end up being a fraud.

Does your investment in a coin worth it?

You need to ask yourself: Does cryptocurrency worth it? Follow your instinct. If you feel it doesn’t don’t jump into it because others are doing so.

Learn it, study it, read resources, how it operates, and for how long would you be able to leave your money in there.

Don’t put all your eggs in one basket

Cryptocurrency is a risky venture which requires caution.

“Your capital should be broken into smaller lots for multiple positions at different price levels. Do not invest your life savings or money that may change your life drastically in the event of a loss” .

digital coins enthusiast advised

Due to the existing level of uncertainty that still exists within the crypto market, it’s advisable to hold a portion of your savings elsewhere.

“Digital currencies are volatile and the prices can go up and down,”

Coinbase Chief Executive Officer Brian Armstrong, said late 2017.

Understand the Market before taking a plunge

You have to constantly keep up with market trading and prices. The price might go up 100 folds now and drop by 20% some moments later.

Also Read:  20 Best Bitcoin Exchange in Nigeria With Best Rate (Updated List)

Understanding the market is a continuous process for you to take the right decision at the appropriate time.

“It is very crucial to do research and be up to date with current trends. Know when to cash in. It is important to stay focused, unemotional and professional”.

CEO of coinbase

Read cryptocurrency investment forum

There are some forums that have category for bitcoin where you can get advice, there are resources dedicated for crypto learning, ethereum guide, litecoin investment strategies and lots more.

For instance, reddit has a dedicated category for bitcoin and other cryptocurrencies exist on the popular forum.

Caution: Don’t share your personal details with anyone on a public forum. Don’t be lured into too-good-to-true investment.

Use forum to widen your knowledge about how you can benefit from thousands of opportunities digital money holds.

Protect your crypto wallet with Two-Factor Authentication

Digital currency wallets can be likened to your conventional bank account details. You’re told never to share your online banking username and password (code) with anyone, that’s how BTC wallet, ethereum wallet work too. They are prone to attacks.

Voices in the business advised that authorizing two-factor authentication in your account is one of the ways of securing your finances.

Google Authenticator has proven to be more secured than SMS two factor. If you already have a crypto wallet you can head straight to Google Play Store to download Google Authenticator and link it with your wallet provider.

You’d need a code from the Google Authenticator any time before gaining access to your wallet dashboard.

Consider Hardware Wallets for your coin

A hardware wallet is a physical electronic device, built for securing bitcoins against online hackers.
Hardware wallet is one of the new innovations after cryptocurrency boom. It must be connected to your PC before bitcoins can be spent.

There are more than five bitcoin hardware wallets, but three most popular ones are:

  • Ledger Nano S
  • TREZOR
  • KeepKey

Hardware keeps all your important private keys in offline environment, even when your hardware is plugged into a computer that is infected with malware or virus.

Note: Hardware wallet can fall prey of crypto hacks

“As bitcoins are digital, cyber-criminals could, potentially, target your computer’s “software wallet” and steal them by accessing your private key.

“Generating and storing private keys offline using a hardware wallet ensures that hackers have no way to reach your bitcoins”.

Jordan Tuwiner founder of buy bitcoin worldwide advised

Check and cross check bitcoin address before making transfer

Another practical way to minimize crypto investment losses is to ensure that wallet address is correct.

Also Read:  5 Ways to Stay Protected Trading Cryptocurrencies

Bitcoin transactions are irreversible, once sent digital coin to a wrong address that’s the end, it is not possible to reverse it.

“Please note that the same wallet can have multiple incoming addresses. The Bitcoin protocol ensures that Bitcoins are not sent to an address that does not exist, but they can be sent to addresses which are inactive or not controlled by anyone”.

remitano advised

What to watch out: Bitcoin address doesn’t have space before or after it. Be careful when you’re copying address from another platform to which transaction is to be made.

Stay away from bitcoin datrading, and spammy hyped up programs

A crypto investment advise you can find out there is to steer clear of datrading or overhyped ICOs or programmes.

Most of the hyped programmes pay unbelievable profit daily, but run away with investors’ money when everyone seems to be pumping in huge amount of money.

Buy and hold

Digital currency investment is best suitable for those who can be patient. It pays to hold for years before selling them.

The BTC Whales in the world today were the earliest investors who bought thousands of dollars in bitcoin more than seven years ago.

Bottom line: While there is possibility for price to fall, there is still plenty of room for price to go up and crypto is an exciting prospect for those who are willing to take the risk.

It worth taking, beware of fake bitcoin wallet as well. Get BTC wallet with tested and dependable firm.

Understand the crypto market before investing

There are local cryptocurrency platforms where you can securely buy and sell bitcoin, ethereum and ethereum, deal with them first.

Some of the crypto exchange in Nigeria include: luno, remitano, jostpay, paxful, and quidax, lots more.

When you understand how cryptocurrency trading works using your local provider you can then go buy and sell coin on international trading platform like binance, bithumb, iqoption, bitssa etc.

Bottom line: Invest responsibly! If you must jump on the global crypto trading platforms, explore the learn page.

Recap:

Investing in cryptocurrency assets is risky, but you can minimize your losses if you do it properly by reducing avoidable mistakes.

You must also keep your emotions in check and trade instead of gambling.

To invest wisely in the volatile crypto market, carry out your due diligence, don’t invest based on hype, and you must understand your risk strength.

Above all, don’t invest what you’re not willing to lose.

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