The reason cryptocurrency investment has attracted global capital attention in recent years, besides its potential returns, is that it combines complex factors of finance, technology, and society. For newcomers, it is important to understand and observe the characteristics of the cryptocurrency investment market to avoid pitfalls. This article presents the ten most common investment pitfalls for newcomers in 2025 for your reference.
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Key Points:
The cryptocurrency market is an emerging market with a large and rapidly changing information landscape, a high learning curve, and irrational bubbles fueled by community sentiment. It is inadvisable to panic sell due to community emotions or chase highs during short-term fluctuations. Real profits in the cryptocurrency market still come from independent research and patiently holding onto projects that are promising and worth long-term investment.
Understand the necessary knowledge of average cost and asset diversification risk management to avoid excessive leverage or investing in projects with unclear prospects, in order to sustain long-term cryptocurrency investments.
In this world filled with overnight wealth legends, social media often showcases profit bragging, but the experiences of those who have stepped on landmines and incurred losses are rarely discussed.
This article summarizes the ten most common investment pitfalls for newcomers in 2025, helping you avoid risks and steadily embark on the right path to wealth accumulation.
Three Key Characteristics of Cryptocurrency Investment
The reason cryptocurrency investment has attracted global capital attention in recent years, besides its potential for returns, is that it combines complex elements of finance, technology, and society, including a yearning for the democratic concept of 'decentralization.' For beginners, these abstract concepts can be hard to grasp. Therefore, instead of rushing to invest heavily in an asset after watching social media or reading articles, it is more important to understand and learn about the characteristics of the cryptocurrency investment market.
A large and rapidly changing information landscape
Cryptocurrencies are digital assets traded globally, with trading occurring 24 hours a day, so the speed of information dissemination and its reflection in prices is faster than most assets.
For example, when former President Trump announced 'reciprocal tariffs,' the stock prices in Taiwan might not immediately reflect this news due to time differences in trading hours, allowing investors more time to discuss its impact on the real economy and making the news's effect closer to objective reality. However, in the cryptocurrency investment market, every piece of information—from project announcements, a KOL's tweet, sudden large on-chain data, to community rumors—can cause the price of a cryptocurrency project to plummet or double instantly. This makes short-term operations in cryptocurrency investment even more unpredictable.
2. A complex ecosystem with a high learning curve.
In recent years, to popularize the cryptocurrency industry, many cryptocurrency projects and exchanges have focused on developing more intuitive account opening and operation interfaces to make it easier for newcomers to enter this market. However, this does not change the fact that many native cryptocurrency projects like Layer2, GameFi, and RWA are still difficult to understand in terms of their basic profit and loss logic, and even harder to grasp their price fluctuation factors.
Under circumstances where the fundamentals are difficult to learn, most newcomers invest real money without fully understanding their investment targets (such as Bitcoin or Ethereum). This makes some cryptocurrency newcomers more susceptible to emotional influences from news when making buy or sell decisions, making it easy to make hasty decisions without comprehensive judgment in the face of either macroeconomic or project-specific positive/negative news. 3. The irrational bubbles of emerging industries.
The price of a cryptocurrency project can skyrocket due to a technological innovation or because of a meme. Beautiful storytelling and community belief can sometimes drive the price more than a product that can actually generate revenue. However, what ultimately sustains long-term price increases requires cryptocurrency projects to develop enduring consensus and practical value. Those 'media darlings' that cannot sustain long-term growth often leave many newcomers as the last holders, leading to their losses.
Cryptocurrency Investment Pitfalls - Mindset Edition
Under the influence of social media and traditional media, the initial intention for newcomers to participate in cryptocurrency investment often stems from the expectation of 'getting rich overnight.' However, the reality is that most people who profit in the crypto space rely on long-term accumulation; most who incur losses are those investors swayed by short-term emotions. In response, I have compiled three common 'mindset pitfalls' so that you can adjust your psychological expectations to better fit this market before and after entering it.
1. Cryptocurrency Investment Pitfall: Lack of Patience
Have you ever had this mindset? Entering the cryptocurrency market with the expectation of 'high returns and quick doubling,' yet after four days without any increase, you start feeling anxious, watching the market more closely than stocks, even fixating on the 5-minute or even 1-minute candlestick charts that professional traders look at. What most newcomers do not realize is that a complete cycle of Bitcoin lasts about four years; therefore, most people who truly make money do not rely on short-term trades but are those who can 'hold patiently for the long term.'
Investment master Warren Buffett once said: 'If you could only make seven investment decisions in your lifetime, you would become very wealthy.' The same applies in the crypto space; being able to calmly observe price trends and project fundamentals gives you the chance to capture truly suitable bargains and achieve long-term wealth growth.
Cryptocurrency Investment Pitfall: Chasing Highs and Selling Lows (FOMO)
The so-called FOMO (Fear Of Missing Out) syndrome, where one fears missing out on price increases, is one of the most common emotional traps in the crypto space. When a cryptocurrency project skyrockets several times in a short period, the community spreads positive news, YouTube recommends it, and groups shout signals; many fear missing the opportunity and end up buying at highs and selling at lows, turning it into a FOMO relay race. This isn't just a mistake by newcomers; many seasoned investors have also fallen into similar traps. But remember: real positive news often occurs 'when no one is paying attention,' while heightened group emotions often signal the beginning of a price peak. Therefore, entering the market in batches and setting a plan for entry and exit timing will be a more stable approach than making decisions based on emotions!
Cryptocurrency Investment Pitfall: Not Conducting Independent Research
Independent research DYOR stands for Do Your Own Research, which is the most basic yet often overlooked aspect in the crypto space. Some newcomers, upon entering the crypto world, only want to 'follow the trends,' 'buy coins recommended by friends,' or 'wait for experts to signal trades,' without ever trying to understand the logic, technology, or market background behind the projects. As a result, we end up not knowing what we are investing in and rely on luck to make profits. Profits gained through luck will ultimately be lost due to lack of skill. To avoid this pitfall, here are three directions to do your homework:
Read the project's white paper and introduction to understand the project's profit and operational logic.
Observe the historical price trends and distribution of large holders to understand the current market price's valuation level. 23. Understand the positioning and utility of the asset within the overall crypto space, and familiarize yourself with the future prospects of this sector. The research and analysis we invest in is the only way to truly accumulate strength and serves as a lifeline to avoid being 'cut' in the future.
Cryptocurrency Investment Pitfalls - Market Edition
There is a widely circulated saying in the investment market from legendary Wall Street investor Warren Buffett: 'The biggest risk in investing is that you don't know what you're investing in.'
Newcomers often become familiar with 'Bitcoin' or other mainstream coins, but due to insufficient knowledge of the cryptocurrency market, they incur losses. In response, I have compiled two common cryptocurrency 'market investment pitfalls' to help everyone avoid these 'zeroing' landmines more accurately.
1. Cryptocurrency Investment Pitfall: Holding the Wrong Coin Too Long.
Many newcomers entering the crypto space will hear a seemingly simple yet dangerous piece of advice: 'Buy and Hold'—buy and just leave it. The problem is that this strategy only applies to a few major coins, such as Bitcoin and Ethereum, which have a long-term value foundation. Randomly choosing a small market cap cryptocurrency project to hold for the long term may not yield profits but could lead to a total loss.
To date, there have been over twenty thousand cryptocurrencies launched, but less than one-tenth have survived for more than ten years to be around today. For instance, EOS, which was extremely popular in 2017 and dubbed the 'Ethereum killer,' is now hardly mentioned; even LUNA (Terra ecosystem coin), which once ranked among the top ten by market cap, can collapse completely within a few days. No matter how well a project tells its story, if it cannot withstand the market's winter, it will only shine for a moment.
For newcomers, if you cannot judge the potential and risks of coins yourself, it is advisable to start with mainstream options, such as Bitcoin (BTC), Ethereum (ETH), and BNB, which have a certain consensus, market depth, and application scenarios; they would be a more stable starting point.
Cryptocurrency Investment Pitfall: Believing Cryptocurrency Scams
Even if you haven't encountered it, you've certainly heard of it: a friend met an 'investment expert' on a dating app, joined a group, and ended up being directed to download a niche or even non-existent trading platform, only to find that once they deposited funds, they couldn't withdraw. This isn't a story; it’s a real event happening every day in the crypto space. This type of cryptocurrency scam includes the following statements:
Claiming that a coin has not yet been listed and encouraging you to invest early.
Platforms that promote 'smart contracts' or 'AI automated trading' high-yield schemes, or those that require you to recruit others after joining to earn high commissions, are suspicious. Legitimate cryptocurrency lending platforms usually have annual return rates of no more than 10-15%. Any project that claims 'monthly returns of 30% or 50%' or 'guaranteed profits' should raise immediate red flags, especially when we are urged that 'this opportunity cannot be missed'; perhaps what we are really missing is just a scam.
Cryptocurrency Investment Pitfalls - Strategy Edition
There are many ways to invest in cryptocurrency, from stable dollar-cost averaging and lending to high-return contract trading, where typically the higher the return rate, the higher the risk involved.
I have compiled three of the most common cryptocurrency 'investment strategy pitfalls' so that we can adjust our investment decisions to avoid high-risk behaviors that may lead to losses!
6. Cryptocurrency Investment Pitfall: Using Too Much Leverage
In the crypto space, contract trading leverage is a double-edged sword; it can amplify profits quickly when the market moves in your favor, but it can also lead to instant liquidation when you make incorrect judgments. Observations from the community suggest that most Taiwanese crypto investors use an average leverage of around 20 times, which is almost unimaginable in traditional finance due to the high risks involved. Newcomers are easily influenced by the crypto 'sharing culture,' seeing friends use 50x or 150x leverage to double their investments, and feel tempted to follow suit, but they overlook the survivor bias behind it: what we see are the survivors, not the 90% of retail investors who have already been liquidated and exited. Given that cryptocurrencies are already extremely volatile, adding high leverage can easily lead to liquidation (being forced to sell at a low price to close positions). For newcomers, leverage isn't something to avoid completely, but it should be approached with a 'small-scale test' method, setting strict stop-losses and maximum loss limits to avoid being kicked out of the market.
Cryptocurrency Investment Pitfall: Not Strictly Setting Stop-Losses
Setting a stop-loss to sell when the price drops by a certain percentage sounds simple, but few can actually do it. Initially, we might set a limit to sell if we lose 10%, but when we actually hit that loss, we start telling ourselves, 'It might bounce back,' or 'Just hold on a bit longer,' and before we know it, it turns into a 20% or 30% loss, ultimately depleting a large portion of our principal. We call this mindset 'holding a losing position,' which is one of the most common trading pitfalls for beginners. In a highly volatile market like crypto, 'admitting mistakes' is a strategic adjustment that allows one to mature in their thinking. True trading experts do not avoid failure but can quickly admit mistakes, preserve capital, and wait for the next opportunity, using a zero-sum mindset to optimize strategies and rise again.
Cryptocurrency Investment Pitfall: Borrowing Money to Invest
Since the cryptocurrency market is an emerging industry, there is always a risk of price fluctuations influenced by policy news, project operations, etc., with the worst-case scenario being a total loss.
If a newcomer does not have enough capital and relies solely on borrowed money to enter the market, they may feel a stronger sense of short-term profit, but once they incur losses, it could mark the beginning of debt. Investments should be made using spare money that one can afford to lose. Some professional investors even believe that if newcomers primarily invest through borrowed money, they are essentially gambling, especially in the highly volatile cryptocurrency market.
Cryptocurrency Investment Pitfall: Failing to Diversify Risks
[AIl in] sounds cool, and it can lead to quick profits, but 'diversifying risk' is the key strategy for long-term survival. In the cryptocurrency world, platforms may collapse, projects may go to zero, wallets may be hacked, and meme trends will eventually fade. If all funds are allocated to a single platform, a single coin, or a single sector, it’s like putting all your eggs in one basket that might crack. Newcomers are usually advised to invest no more than 20% of their total assets into the crypto space, and to diversify across different types of assets and platforms. Major assets like Bitcoin (BTC) and Ethereum (ETH) should form the core of your portfolio, while smaller market cap cryptocurrencies and emerging sectors (like DeFi, AI-related coins, etc.) should be invested in various small amounts, focusing on accumulating investment and research experience.
10. Cryptocurrency Investment Pitfall: Selling Too Early (Paper Hand)
Many people actually bought in at a low point but sold out due to a short-term rebound, missing out on real explosive returns. This emotional investment strategy tendency in the crypto space is referred to as 'Paper Hand,' meaning due to a lack of comprehensive understanding of the project and industry, one easily wavers and sells too early. Let's go back in time; suppose a person bought Bitcoin for 1,000 TWD in 2011 and did nothing, by 2025 it would have turned into 8 million. This isn't a myth, but the astonishing effect of 'letting a long-term valuable asset sit still.' If we are quite confident in an asset, we can actually give it some time to grow and not sell too quickly due to a piece of news.
Based on the average price of Bitcoin at $11 in 2011, today it would yield approximately 8 million in returns. Source: CoinStats.
Common Questions about Cryptocurrency Investment Pitfalls
Q1: What are the most common mistakes made by newcomers in cryptocurrency investment?
A1: Including lack of patience to hold, chasing highs and selling lows, blindly trusting recommendations, being misled by Ponzi schemes, excessive leverage, etc.
Q2: What does DYOR mean in cryptocurrency investment advice?
A2: DYOR stands for Do Your Own Research, which means we should understand the projects we invest in and their related industry ecosystems to avoid being driven by emotions in investment decisions.
Q3: Is it necessary to hold cryptocurrency investments long-term (Buy & Hold) to easily make profits?
A3: Not all cryptocurrency projects are suitable for long-term holding; major coins like Bitcoin and Ethereum are more suitable for long-term holding, while holding onto smaller market cap cryptocurrencies may carry even higher risks.
Q4: Should leverage be used in cryptocurrency investment?
A4: Newcomers are advised against high leverage operations. Cryptocurrencies are already highly volatile, and combining them with leverage can easily lead to liquidation. If you must use leverage, it should be with small amounts and strict stop-loss measures.
Summary
These ten newcomer pitfalls boil down to three core points: comprehensively understanding the market, controlling leverage and position exposure, and extending the time for investment/research. Investing is never a sprint; it is a marathon. Our goal is not to win every time but to lose less, survive longer, and let the long-term trend of fortune help us turn our lives around.
The above is a detailed account of how cryptocurrency investment can lead to becoming a victim in the crypto space. For more information on the ten most common pitfalls for newcomers in the crypto space, please follow Liang Ge #BTC再创新高 $BTC