Key Highlights
- As the number of crypto investors is increasing, these newcomers are most likely to make more common mistakes that can cost them so much
- However, they can take precautions like diversification to mitigate their losses during the time of extreme volatility in the crypto market
- Apart from this, they can also enhance their gains by avoiding emotional trading and not chasing social media hype
After the historic performance and intense bull run in 2025, the cryptocurrency market is now entering the new year, where it is going to see lots of ups and downs. Last year, Bitcoin created a new all-time high at $126,000 with a whopping market capitalization of $3 trillion, and on the flip side, the same crypto market suffered massive security breaches in the same year.
While old traders keep investing in the crypto market, a new batch of fresh crypto traders is expected to onboard in the next few years. According to the latest report, around 30% of Americans own cryptocurrencies by early 2026, and 61% of owners plan to increase their crypto investments in 2026.
The entry of new crypto investors would inject fresh capital into the digital asset market. However, it also means that these newcomers are most likely to make mistakes, which can cost them a lot of money.
This blog shares some common mistakes that new crypto traders can make, along with resolutions to avoid them.
1. No Diversification
One of the biggest problems seen among new investors is investing everything into a single cryptocurrency. This kind of investment practice exposes their investments to volatility. When the underlying cryptocurrency or digital assets’ value falls quickly, their investment also sinks quickly.
During the 2025 energy crisis, many cryptocurrencies with Proof-of-Work (PoW) have witnessed a massive price fall of over 40% due to regulatory uncertainty. This kind of downfall in the crypto market mostly affects those who stake their money in the cryptocurrency.
According to the Coinbase survey, in 2025, more than 75% have planned to increase crypto allocations. Also, they admitted that diversification can mitigate risks, with 59% targeting over 5% in varied assets.
Similarly, BlackRock’s 2025 Fall Investment Directions report mentioned that undiversified portfolios have suffered massive losses compared to their counterparts by up to 13.7% annually.
How to Resolve This
There is a practical solution mentioned by firms like XBTO, which affirmed that it is to structure a portfolio with 60% to 70% in main assets like Bitcoin and Ethereum for stability, 20% to 30% in altcoins, and 5% to 10% in stablecoins to create a safe space to provide a buffer during market downturns.
Also, new traders should use tools like portfolio trackers to rebalance quarterly to ensure no single holding grows to dominate one’s investments.
2. Not Taking Security Factor Seriously
In trading, the security factor is important and should not be taken lightly. New traders often make mistakes while doing crypto trading, such as setting weak passwords, storing private keys on exchanges, or not setting two factor authentications. Hackers and scammers take advantage of these loopholes.
In 2025, the total value stolen from the crypto ecosystem reached a record $4.04 billion, a 24% increase from prior years.
Chainalysis’s 2025 Crypto Crime Report mentioned that $3.4 billion of this was complete theft, including a massive $1.5 billion breach of the Bybit exchange linked to North Korean hackers.
The problem is not limited to just an external threat. A Kraken survey of 789 U.S. crypto holders revealed that 67% had made common mistakes like sending funds to the wrong wallet addresses or misplacing their keys.
How to Resolve This
In order to avoid scams and hacks, new traders must use a hardware wallet from a company like Ledger or Trezor to store private keys offline. Not just this, they must enable multi-factor authentication (2FA) using an app like Authy.
Apart from this, one trick that new traders should try is to enable address whitelisting on exchanges. They should also conduct regular security check-ups.
The Hacken 2025 Yearly Security Report revealed that over $2.1 billion in losses were linked to operational failures. That is why traders must take security into their hands, including self-custody.
3. Emotional Trading
The volatile nature of crypto markets is a perfect trigger point for emotional trading, which leads to panic selling during turmoil and vice versa. This kind of emotional trading wipes out long-term gains.
According to data from a 2025 ChainPlay survey, approximately 92% of crypto investors admitted that their decisions were influenced by emotions. This pattern led to average losses of 37% during market corrections.
A real-world example occurred in early 2025 when Bitcoin fell 28% from $109,350 to $78,000. This drop in the cryptocurrency sparked panic selling, a reaction amplified by fear-based narratives on social media, as analyzed by BtcDana.
How to Resolve This
To resolve this issue, traders must use techniques like Dollar-cost averaging (DCA). This technique allows them to invest a fixed sum of money at regular periods of time despite the fluctuations in the price.
The trader who uses the DCA technique can reduce the threat of panic selling by 40%. Apart from this, they can also follow pre-defined rules, such as stop-loss orders at 10% to 20%.
4. Not Considering Trading Fees
Most traders do not know that each crypto trading platform has a different trading fee structure based on the region and regulatory environment. While these trading fees look small, these small percentages can compound dramatically and silently destroy profits.
Last year, in 2025, these trading fees on centralized exchanges (CEXs) stayed high and kept fluctuating between 1.5% and 2% per trade. These kinds of trading fees have damaged retail investors during times of high volatility and affected short-term trading.
How to Resolve This
In order to avoid this, traders must do research on different trading platforms available in the crypto market. They should choose exchanges with low fee structures, such as Binance, with its 0.1% maker/taker fees.
5. Relying on Social Media Hype
Some days, social media can become the biggest enemy of crypto traders as it creates unnecessary hype for random tokens. New beginners in the crypto trading sector often rely on social media buzz without their own research or technical analysis.
The cryptocurrency sector is full of fake projects that generate buzz on social media platforms like X, Instagram, Facebook, and others. Once investors put their money into these tokens, the creator intentionally crashes the tokens, which is known as a rug pull.
According to the Chainalysis report in 2025, approximately 3.59% of all new tokens launched come with clear “pump-and-dump” patterns. To understand this, one can take the example of the popular case of the LIBRA token scandal in Argentina.
In a nutshell, not all tokens seen over social media are legit and considered a fruitful investment.
How to Resolve This
Before investing in any token, traders must do research on the projects, like reading their tokenomics, audit certifications, and actual on-chain status through tools like Dune Analytics. Also, always ignore the fear of missing out (FOMO) sparked by social media platforms.
Final Words
One thing that new crypto traders must keep in mind is that crypto trading is not all about rainbows and unicorns. It is not always possible to win in the game of trading. However, making a few mistakes can help you to secure investment and protect yourself from external threats like cyber attacks. Also, techniques like diversification can help new traders to sustain in the highly volatile market of cryptocurrency.
Also Read: A Look at Ethereum Neobanks and Why They Are Growing Fast
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