Cryptofail: 5 Common Mistakes That Cost Crypto Investors

1. Moving the Goalposts

Many investors set a price target at which they plan to sell part of their portfolio. The problem arises when the market approaches that target. Instead of selling, they move the goalposts in hopes of an even bigger profit. This cycle often repeats until the bull run ends, and any gains are lost during the ensuing bear market. Stick to your original goals and make sure to collect profits.

2. “Mental Accounting”

People often separate “crypto money” from “normal money,” which can lead to risky behavior. Crypto is treated like “chips in a game” and may be risked on projects with questionable potential, even though they would never risk the same amount in fiat currency in a bank account. It’s crucial to view all your capital—regardless of its form—as a single pool of money.

3. Exaggerated Security

Paradoxically, trying to achieve maximum security can backfire. If access to your resources is overly complicated, human errors—like forgetting passwords, losing recovery phrases, or technical issues—can make your funds permanently inaccessible. Choose solutions that are both secure and user-friendly.

4. Mining as an Investment

While mining can be appealing to enthusiasts, it often isn’t financially optimal. Historically, investing the same amount in cryptocurrency directly would have yielded higher returns. Mining is usually riskier, more complex, and less profitable than buying crypto outright.

5. Ignoring Taxes

Ignoring tax obligations can be costly. Active cryptocurrency trading generates tax liabilities, and unplanned profits or losses can lead to unexpected problems. Not all losses are deductible—for instance, funds lost on exchanges usually cannot offset profits. Always maintain a separate reserve to cover potential tax obligations.