These are some areas where we screwed up when starting out. This is not financial advice ser.
When are you entering the market
Pull up the Bitcoin/USD chart, select Daily or Monthly. Does it look something like this?
If it does be a little bit careful. Nothing goes up forever. You’re in a bull market which might end soon or in a while.
If it doesn’t look as extreme, well done.
Your first bull market is for learning. Losing your money is honestly a good learning experience as long as you don’t end up homeless. Crypto has so far had a bull market every 3-4 years which is pretty crazy compared to other markets.
This is the thing that can really make you sad. In many countries every trade from crypto to crypto, or crypto to USD is a taxable event. You need to calculate your cost basis and your realized profit/loss every time you do this.
Read more about crypto tax in our post.
Buying with USD
Going from USD to crypto is pretty cumbersome. You need to KYC (know your customer) which means sending a picture of your driver’s license and all information about yourself. As of right now you pretty much have to just take it. Unless you want to buy for cash in a backalley.
Standard choices: Coinbase, Binance, Gemini
Using a blockchain wallet
Generally – if you want to buy an NFT or use DeFi you want to connect to Ethereum. The most used Ethereum wallet is Metamask. It can be used as an extension in your browser.
- You install it.
- Create a wallet.
- Write down the seed words – which means you can restore the wallet.
- You’re good to go.
You’re your own bank when you have a blockchain wallet. Which means you have to take security seriously.
Some examples of how you lose your money interacting with your own wallet
- Pretty much every crypto website has a similiar scam phising site advertising on Google – always check every website you’re visiting so it’s the correct one.
- You have a lot of browser extensions installed and one of these are malicious or gets compromised.
- You install a file with a virus. A good way to mitigate this is to be very careful with what you install.
- You open a malicious file. It can literally be a .docx file.
If you go all-in on a coin you’re attaching both your ego and all of your money to that decision. Which makes it a lot harder to admit being wrong. And to think clearly around that decision. Some coins have armies of people that are completely lost to the cult of their investment.
Although some people can do well financially with this, it may not be great for your life. And hard to sell at the right time.
In a bull market everything goes up.
When we bought our first tokens they went up a lot. And we thought we were geniuses obviously. But let me tell you. That was pretty far from the case.
You will start looking for information. The problem with crypto is that whenever someone says anything they probably have a financial interest in doing so.
The mildly positive thing about this is that you really really need to learn to not trusting any information without verifying yourself.
Influencers sharing “ideas” about coins. Often this is when they want to exit their position which they had long before tweeting. You are their exit liquidity and they dump on your head.
Or anyone speaking about any coin or token generally means they own it. When you have a huge financial incentive in a token going up – your world view easily gets biased to that incentive.
Fear uncertainty doubt
There has been this recycled FUD about Tether (USDT) not being backed and being close to collapse for like 5 years. Recently put to rest by a court ruling.
- During 2017 we had “Chinese New Year coming up”. Where apparently every Asian was gonna buy crypto because they were celebrating the holiday.
- There was also the “Wall Street Bonuses” where all the wealthy traders on wall street would get their huge bonuses and put it all into crypto (LOL).
That’s when all coins dropped 80 – 99%.
Good sources for learning
Ledgerstatus on twitch – Trading.