My Beginner Mistakes

When I entered the crypto space, I made a series of stupid mistakes that I’d like to share so that others can avoid doing the same. If you have experience in the market, a lot of this may be boring or repetitive, but please add any beginner misconceptions that you held in the comments if you have the time.

1) I had no understanding of market cap. I bought ADA at $.70 expecting it to 1000x because I thought it was “cheap.” Ouch. To make a rational exit plan based on realistic prices, you need to understand market capitalization, or the total value of a cryptocurrency. The formula for calculating crypto market cap is: Market Cap = Current Price x Circulating Supply. Bitcoin and ETH will probably always have the highest market caps for the time being. The lower the market cap, the more room for growth BUT there’s much more risk. Low cap coins are basically gambling.

2) I didn’t understand crypto market cycles. I approached the market with the mindset of traditional stocks: the longer you hold, the more money you make over time. Outside of BTC and ETH, this is NOT true in crypto. This sector is full of coins that fall into obsolescence after a glorious run. It is important to both buy and sell altcoins within the 3-4 year market cycle. I also didn’t understand the BTC halving cycle, and how price action for altcoins are tied to BTC’s price movement. The BTC halving cycle is a recurring event that occurs approximately every four years, which reduces the block rewards miners receive for processing transactions by half, resulting in a decreasing supply of newly minted bitcoins over time. The theory is that prices pump due to increasing demand and decreasing supply.

3) I listened to influencers and echo chambers without an exit strategy of my own. I didn’t sell anywhere near the top because I was waiting for price predictions to come true. I also listened to the diamonhand HODL rhetoric, believing that the market only goes up. Do not overdose on the hopium. Create your exit plan now, while the market is boring and crabbing.

4) I did not consider the advice of my partner. I was told to sell very close to the ATH after a conversation about investing, but I still held as the market crashed. Now I’m the reason why my wife doesn’t like crypto. If you are in a serious relationship, remember to be transparent about your finances.

5) I didn’t understand the main use case of crypto. There are bullshitty projects that bank on buzzwords to take your money. The main use case, from my understanding, is deconcentrating power within traditional financial infrastructures and empowering regular people with tools to make their own independent banking decisions. Projects that fall outside of this motive can still make you good money, but most of them are likely to be gimmicks.

6) I kept all of my money on exchanges. Nothing bad happened (thank God), but I wasn’t using crypto how it was meant to be used. Centralized exchanges like Binance or Coinbase are just more concentrated middlemen that use your money to make themselves money. Take your coins off of the exchanges and stake them yourself. You have the privilege of learning from the mistakes of many many people who have done this before you. You could seriously lose all of your holdings. Not your keys not your crypto.

Those are the major mistakes that I’m comfortable sharing. Please feel free to share your mistakes so that these new comers don’t become exit liquidity!