Cryptocurrency has become one of the world’s most popular investment options. It is taking over from the traditional assets that have struggled over the past few years following the effects of the coronavirus pandemic. Cryptos have been established as an alternative investment attracting several new investors.
As a relatively new investment option, there are not so many crypto experts and knowledge in the public domain remains limited. Most of the investors thus are likely to make mistakes as they catch the hang of the crypto industry. A recent survey has revealed that panic selling is the biggest mistake made by crypto investors.
The survey titled “Coin storage security: A closer look at crypto storage and passwords” was looking to establish the investor’s sentiments towards the safety of crypto storage. It surveyed 1021 US-based crypto investors. This number, while low compared to general investors, gives a perfect outlook of the crypto market.
What is crypto panic selling?
Once you understand crypto selling as the biggest challenge that investors face, you need to know what it entails to help you avoid it. Crypto volatility is one of the major concerns in the crypto world. Ever since its launch, the coins have struggled for stability as the industry is impacted by demand-supply, news and other current world happenings, and specific network developments.
The volatility however is also what allows the investors to gain from crypto. Investors are always looking to buy on the low and sell on the high for profits. To understand the correct market run, you need to analyse the token before deciding whether to sell or buy.
Most new investors do not understand market analysis. They do not know about technical or fundamental analysis. Instead, they only depend on the simple market shift to make trading decisions. Crypto panic selling is where the investor sells without understanding the market. In some cases, a little dip can mean a resistance level, and the coin will resume the run for even better returns. Also, some dips never last long as there are swings and other longer trends in trading.
For example, after the highs of around $19,000 in 2017, Bitcoin declined to trade at almost $4,000 by March 2020. It then had a bullish run to hit over $65,000 by mid-2021. Those who had panic sell in March 2020 have since been regretting their decisions.
The survey revealed that 80% of the inventors had panic-sold before and regretted their decisions.
Other crypto challenges
Other than crypto panic selling, the survey established other concerns the crypto traders faced. More than 33% of the respondents had fallen for crypto scams. These scams were targeted by mobile apps (44.6%), websites (45.2%) and emails (47.7%).
Password mismanagement is another mistake by investors. 61% of the surveyed felt they had safe passwords while 12% felt their passwords are not safe. The investors then opt for multiple ways to remember the passwords; taking screenshots (10.3%), password safes (15%), handwritten notes (18.6%), and password managers (26.6%).
Of all the inventors who lost passwords, 85.7% were recovered. For those who lost their keys, they lost an average of $2134 of investments.