Survival Guide for Cryptocurrency Beginners

The goal is not to get rich overnight, but to avoid bankruptcy while potentially accumulating wealth over the long term.

Written by: Alertforalpha

Translated by: Blockchain Simplified

Let’s face it: as a beginner, if you’re not careful, crypto investing can ruin you.

Most crypto-related content is either hype or technical jargon; this guide is neither.

This is a survival guide for crypto newcomers.

A harsh reality:

Bitcoin can drop 50% in a matter of weeks. This has happened multiple times; in 2022, Bitcoin fell from $69,000 to $15,000, a drop of up to 78%.

Altcoins can drop 90% or more. Some coins may never return to their previous highs.

You could lose everything overnight. Click the wrong link, make the wrong investment, time it wrong—bam, your money is gone.

But the key is: many people have made life-changing wealth in the crypto asset market. The difference is knowing how to protect yourself.

Only invest what you can afford to lose

This is not just good advice; it’s the key to survival.

"Can afford to lose" means:

"Not your rent."
"Not your emergency savings."
"Not the money you use for food, bills, or raising children."
"Absolutely not borrowed money."

Simple test: If losing this money would change your lifestyle, don’t invest.

Real case: If you have $10,000 in savings, invest no more than $1,000 in crypto assets. If you lose it, you’ll be upset, but you won’t be homeless.

Some people put all their savings into crypto assets during a bull market. Don’t be that person. They usually end up bankrupt.

Understand the real feeling of volatility

Volatility is not just a fancy word—it’s an emotional torment.

Imagine this scenario:

Monday: Your $1,000 investment rises to $1,200 (+20%).
Tuesday: Drops to $800 (down 33% from Monday).
Wednesday: Rises back to $1,100 (up 37% from Tuesday).
Thursday: Drops again to $700 (down 36% from Wednesday).

This is common in the crypto asset market. Your emotions will feel like a rollercoaster. You’ll think:

"Sell everything during the crash."
"Buy more during the surge."
"Check prices every 5 minutes."
"Lose sleep."

Psychological trap: Most people buy high when excited and sell low in panic. Even if the overall market trend is upward, this will lead to losses.

Start with Bitcoin, avoid random coins

Why start with Bitcoin:

"It’s the least likely to go to zero."
"It has the longest track record."
"Institutional investors choose it."
"It’s easier to understand."

Avoid these beginner mistakes:

"Bitcoin is too expensive; I’ll buy cheaper coins."
"This new coin could go up 100 times."
"My friend made money on [some altcoin]."

Reality: You can buy $50 worth of Bitcoin. You don’t need to buy a whole Bitcoin.

Save the gambling mentality for later. Once you understand Bitcoin’s behavior, consider exploring other coins.

But at the start, choose the option with the lowest risk.

Dollar-cost averaging is your best friend

What is dollar-cost averaging: Instead of investing $1,000 all at once, invest $100 each month for 10 months.

Why it works:

"Buy more when prices are low."
"Buy less when prices are high."
"No need to predict market timing."
"Reduces emotional decision-making."

Real case:

Month 1: Bitcoin at $80,000, you buy $100 (0.00125 BTC).
Month 2: Bitcoin at $60,000, you buy $100 (0.00167 BTC).
Month 3: Bitcoin at $90,000, you buy $100 (0.00111 BTC).

In the long run, your average purchase price will be better than trying to guess the best timing.

Understand different types of risks

Market risk: The entire market crashes together. In 2022, Bitcoin, Ethereum, and almost all altcoins dropped 70-90%. Nowhere to hide.

Individual coin risk: Even if the market performs well, the coin you choose may fail. Remember Terra Luna? It dropped from $80 to nearly zero in days.

Exchange risk: Your crypto asset platform could be hacked, go bankrupt, or freeze your account. FTX had millions of users until it collapsed overnight.

Technical risk: Smart contracts may have vulnerabilities, DeFi protocols may be attacked, and new projects may be scams.

Regulatory risk: Governments may ban or heavily regulate crypto assets. Some countries have already done so.

Don’t get addicted to leveraged trading

Leverage means borrowing money to buy more crypto assets. It sounds tempting when prices are rising.

How it works: You have $1,000, and with 10x leverage, you can buy $10,000 worth of Bitcoin.

Trap: If Bitcoin drops 10%, you lose your entire $1,000. If it drops 15%, you still owe money.

Reality: Leverage is for experienced traders who can handle total loss. As a beginner, leverage is financial suicide.

Promises vs. reality:

Promise: "Turn $1,000 into $10,000 faster!"
Reality: Turn $1,000 into $0 faster.

Ignore the noise

You’ll see various information:

"Bitcoin will hit $500,000 next week!"
"This altcoin is the next Bitcoin!"
"Crypto winter is over, buy everything!"
"The government will ban Bitcoin tomorrow!"

Truth: No one can accurately predict short-term movements. Even experts often guess wrong.

Focus on the following:

"Learn the basics."
"Gradually build small positions."
"Understand the assets you hold."
"Ignore daily price fluctuations."

Stop paying attention to:

"Accounts promising guaranteed returns."
"Accounts using rocket emojis every day."
"Accounts claiming to know when to buy and sell."
"Accounts making you feel like you’re missing out."

Properly protect your crypto assets

Exchange security: Don’t keep large amounts of money on exchanges. They can be hacked or go bankrupt.

Wallet basics: If the amount exceeds $1,000, use a hardware wallet (like Ledger or Trezor).

Backup recovery phrase: Write down the recovery phrase on paper and keep it safe. This is how you recover your crypto assets if you lose your wallet.

Never share your private key or recovery phrase: Don’t share it with friends, online "customer service," or anyone.

Common beginner mistakes

Investing more than you can afford to lose: Often leads to panic selling at the worst times.
Chasing quick profits: Jumping from one coin to another, usually buying high and selling low.
Not understanding what you bought: Buying random altcoins without knowing their purpose.
Emotional trading: Making decisions based on fear or greed rather than logic.
Blindly following influencers: Taking financial advice from people who profit from selling courses.
Not protecting crypto assets: Putting all funds on exchanges or losing recovery phrases.

Simple beginner strategy

Months 1-3: Learn about Bitcoin. Buy a small amount ($50-100) to familiarize yourself with wallets and exchanges.

Months 3-6: Start dollar-cost averaging into Bitcoin. Invest $100-200 each month based on your budget.

Months 6-12: After understanding Bitcoin, consider adding Ethereum. Keep it simple.

Year 2 and beyond: If you want to explore altcoins, limit their share in your crypto portfolio to 10-20%.

Throughout: Keep learning, ignore the hype, and never invest more than you can afford to lose.

Summary

Crypto assets can make you money. In the long run, they have made many people wealthy.

But if you go about it the wrong way, they can also ruin you.

Those who do well in the crypto asset market are not the ones chasing 100x returns, but those who first protect their principal and then try to grow it.

Start small, learn as you go. Don’t let greed overwhelm common sense.

Remember: The goal is not to get rich overnight, but to avoid bankruptcy while potentially accumulating wealth over the long term.

There will always be another opportunity in the crypto asset market. But if you lose all your money the first time, you won’t be able to participate next time.

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