Some of us have been involved with crypto for over 5 years, yet we’re still poor (or not rich yet).
The reason is that we’ve been unconsciously or ignorantly sabotaging our own financial progress through the habits and ways discussed in this article.
I came up with these after looking at my own crypto journey and feel utterly dissatisfied with my current portfolio.
Given how long I’ve been in the market, I feel my portfolio should be a lot richer than it is right now.
Below are what has slowed my progress with the hope that you can learn from it to give yourself a better chance in the market.
9 reasons you’re still poor in crypto
I bought my first Bitcoin (BTC) in mid-2017 when it was just $750 (no, not a whole Bitcoin, just a fraction).
All I needed to have learned then to be rich now was to buy and hold it away as much as I could, never touching it until it becomes life-changing money (or goes to zero).
You see, investing in crypto is like buying, say land. As the community or area develops over the years, the land will increase in value, sometimes many times over.
Back then, it was just Bitcoin, Ethereum, and other altcoins. There’s no DeFi for lending, staking, and all that degen stuff we have today, so buy and HODL was all we needed to do.
But we didn’t know any better.
1.1 How I started (wrongly) with crypto
My friend who introduced me to crypto sold $100 BTC to me directly to use in investing on a high-yield investment platform or Ponzi scheme which was paying a 10% daily return then.
It was profitable for me as I was early into the game and made over $1,000 from both my earnings and referral rewards before the system collapsed in under 2 months.
And from there, it was from one Ponzi scheme after another until the 2017 bull run was over and we went back to our normal lives.
The only good thing I did in all of the crazy Ponzi schemes was that I cashed out and spent most of my earnings on real-life stuff.
So, it wasn’t a totally bad run for me, but a lot of people I know lost a lot of money.
However, it would’ve been better if I had converted everything to BTC, ETH, or some other ‘good’ coins and just held it until now, but again, we didn’t know any better.
1.2 The key point
The takeaway from this is that you should educate yourself about the market and have a responsible investment strategy for every coin you invest in.
That’s why we created this blog and our Telegram community where you can learn from the experiences and knowledge of other passionate crypto investors.
Make sure to learn everything you can about a coin or token before investing in it. Click here to learn how to do your own research like a pro.
Unchecked greed, like overspeeding, can kill your investment, rob you of your profits, and steal opportunities from your hand.
In early 2021, I made my foray into the BNB Smart Chain (BSC) after Ethereum started sucking the life out of me in the name of gas fees.
I made a lot of money from almost nothing but I lost a chunk of that profit to greed.
Here’s the story.
I made my first investment in BSC by depositing into the CAKE-BNB pool and farming CAKE.
Subsequently, I switched to the FUEL-BNB pool and started farming FUEL with auto compounding on Beefy starting at over 2% daily APY.
To cut the long story short, I was able to turn my $500 initial investment into a little over $9,500 in under 6 months.
At this point, I felt, it was time to exit this degen play. But on second thought, I decided to let it get to $10,000, then I will cash out everything into BUSD and put it in a lending protocol to keep earning me interest.
It’s a beautiful plan that’s just $500 away. What could go wrong?
2.1 How greed robbed me
The next day, the market began to drop and I was down to $8k+, and the days that followed, FUEL was starting a free fall. So, I decided to cut my losses and made it out with $7,000.
It was a good decision as the market never recovered and FUEL went from $900 to less than $100 in the following weeks. But my greed already cost me more than $2,500 of earned profit.
This is just one of many different instances where unchecked greed made me lose money that I already earned.
Now, this is not about regretting not selling the top.
It was about not selling when you’ve reached your profit target or when you already knew you should be selling but decided not to because you wanted MORE, and then you lose what you already made.
2.1 The key point
The takeaway here is that,
- I had no predetermined exit point for the investment described above. This was a degen play that’s constantly monitored and I was going to exit when I feel the upward potential is no longer worth the risk of continued exposure.
- Instead of leaving when I knew I had really come so far with this investment, I decided to go one step further. That was greed and it’s a $2,500 mistake.
- Have a predetermined exit point or follow your gut when you feel it’s time to exit a profitable position. That little voice inside telling you that you can make even more is greed and it’ll steal your profit.
The best way to curb greed is to have a plan or strategy and stick to it. But be flexible enough to flow with the market.
Also, you have to be ruthless in taking profit when you reach your target or cutting your losses when you realise you’ve made a mistake.
3. Blindly following other’s investment strategies or advice
That it worked for me doesn’t mean it will work for you or vice versa. So, do not blindly follow the investment strategy or advice of another person.
For example, most influencers have zero exposure to or even sufficient knowledge of the assets they promote. So, following their advice is like drinking from an empty cup.
Furthermore, most shills on the internet have no idea what they’re talking about, even though they always sound very confident and convincing.
Timing, portfolio size, personal risk tolerance, and a mix of other factors determine one’s investment outcome.
For example, the investment strategy of someone with $1 million and another with $1,000 cannot be the same, even if they’re investing in the same coin at the same time.
You need to make investment decisions based on your own personal preferences, risk tolerance, and the information you have at hand.
Crypto is heavily manipulated, you don’t even know who’s just trying to waylay and use you as exit liquidity or sharing genuine opinions.
So, you have to always do your own research and make your own informed decision on every single investment you make.
4. Living on your crypto investments
When you live on your crypto investments, you tend to cash out profits or sell your assets before they could mature due to financial needs.
I have made several really good investments that I couldn’t HODL long enough to reach my profit target before selling because I needed the money to survive or for emergencies.
For example, I first bought Injective (INJ) at below $1 with the plan of holding until $15 or $20. But I sold it too early at $2 about a month later to finance an emergency.
Afterwards, I watched it pump all the way to its all-time high of $24 with me already out of the market.
If I hadn’t needed to sell too soon, I would have reached my profit target of $15 and $20 and made a kill out of it.
This is just one of many such instances where living on your crypto investments could make you miss out on great gains or worse, even force you to sell at a loss for cash.
To avoid this, if you work in crypto and earn in crypto, try and separate your investment funds from your living expense funds.
Furthermore, find ways to increase your crypto income which you can use to cover your living expenses so that you wouldn’t be tempted to touch your long-term investments prematurely.
Or better still, get a real-life job that takes care of your daily expenses so that your crypto investments can have time to grow.
When you degen or yolo into every new dog-themed meme coin, you’re not investing, rather, you’re gambling, and gambling will not take you anywhere good.
Of course, there’s a place for “degening”, “yoloing”, and “apeing” in crypto, but it should be a very tiny portion of your portfolio.
Furthermore, you must know exactly what you’re doing and be aware that you can lose 100% of your degen play money.
However, throwing money on random shitcoins and hoping that one or more of them will make you rich is what losers do, and you’re not a loser.
Don’t invest and hope for luck. Invest based on fundamentals and sound judgment, then your luck will shine.
6. Not learning how to take profit
The only profit you make in crypto is the one you take. Unrealised profits cannot pay your bills, so you have to learn how to take profits.
This means before you invest in any token, farm, or pool, determine when and how you’re going to be taking profit and where that profit will go.
For example, if you decide to invest in the LAW-CST pool, you can choose to keep or sell the daily LAW rewards into a stablecoin as your profit-taking strategy.
Furthermore, if you invest in BTC for example, you need to set your take-profit target at which you’re going to sell and take your profit.
For example, if you buy BTC when it’s $19,000 and your profit target is say 2x or 100%, it means you’re selling when it reaches $38,000.
However, developing a profit-taking strategy can get more complex than the above examples, but the idea is simple.
- Just know when you’re selling and taking your profit.
- What you’re taking your profit into. It could be stablecoin(s) or blue chips like BTC and ETH.
- Are you taking partial or full profit? For example, taking only 50% of your earned profit and letting the rest ride with the original capital.
- Are you closing the entire position or removing just the earned profit and letting only the original capital continue to ride?
- Will you be cashing out your profit to fiat, staking or lending it to earn interest?
You could also break down the various price points at which you will begin to take profit and exit your position.
For example, if I bought CST at $0.5 I may decide to sell 10% when the price goes to $1, another 10% when the price goes to $2, etc until I finish selling everything.
There’s no limit to how you can structure your profit-taking formula and there’s no one-size-fits-all. So, you’re going to do what works for you.
7. Not having and following a strategy
Investing without a strategy is the same as gambling.
Don’t let the word “strategy” intimidate you though. It could be something as simple as “I am going to DCA into BTC and ETH every month and never selling until after 10 years”.
It doesn’t have to be some genius plan or complex game theory design. Keep it simple and make sure you stick to it.
However, constantly analyse and evaluate the soundness and relevance of your strategy and don’t hesitate to adapt to the changing market circumstances.
You can change your plans or strategies as you learn and grow, this is normal.
The most important thing is for you to “know exactly what and why you’re doing” at every point in time.
This gives you focus and clarity to help you navigate the highly volatile, heavily manipulated, and turbulent crypto market.
8. Falling in love with a coin (escalated commitment)
When you fall in love with a particular coin or token, even when it’s turned into a bad investment, you tend to continue to hold onto it.
Never fall in love with any coin to the extent that you refuse to see or admit it when the fundamentals have changed too much.
The crypto market moves so fast, and a lot of things can change drastically in a relatively short time.
When you see that a project no longer meets your investment criteria, it’s time to reevaluate your position and cut your losses if you have to.
Of course, you can’t be right with every investment decision, but how you handle the wrong ones matter too.
Don’t try to rationalise things and explain away what’s obviously wrong with the investment.
You had a goal and purpose for this investment. As long as that’s no longer in play, reevaluate your position accordingly.
First, understand that crypto is a great wealth transfer tool and you have to position yourself to receive as much of the wealth as you can.
There are so many ways to make money in crypto without making any upfront investment that you have to be extremely lazy or clueless to not be earning some.
So, quit laziness and get hustling and grinding for the crypto gold that’s everywhere for the taking.
We hustle for the sweet crypto money every day but sometimes our portfolio just doesn’t reflect this effort.
In this post, we’ve discussed some of the bad habits or investment practices that are slowing down your progress and how to avoid them.
This list is certainly not exhaustive. So, over to you.
What other things do you think are hindering people from making good progress with their crypto portfolio? Share with us in the comments section below.