In 2017, I moved to Tokyo with my girlfriend to support the setup of my company's new Japanese office. With an increase in salary, I decided to invest my newfound savings into cryptocurrencies after seeing the market's explosive growth. Starting in May, I spent a dozen hours understanding how cryptocurrencies work and bought bitcoin and a few altcoins through Coincheck in Japan. I also invested $35,000, which was a combination of my savings and borrowed money from my father.

By January 2018, the value of my investments had risen to over $600,000, but a year later, the amount was $30,000, $5,000 below my initial investment. Here are some lessons I learned from my experience:

Don't invest without a plan: When investing in cryptocurrencies, it's essential to have a clear financial plan that considers your future goals and risk level. A well-defined plan can help you avoid making emotional decisions based on market fluctuations. It's important to ask yourself what your objectives are for each investment. Are you investing in cryptocurrencies as a long-term investment or a short-term opportunity for profit? By having clear goals in mind, you'll be better equipped to make informed investment decisions.

1. Don't overestimate your investment skills: Investing in cryptocurrencies requires thorough research to make informed decisions. It's crucial to understand the technology behind the coins you're investing in and the potential risks associated with each investment. It's important to research not only the coin's value but also its development roadmap, the strength of the community behind it, and its economic factors. Investing in high-risk coins without proper research can result in significant losses.

2. Don't overestimate cryptocurrency diversification: Diversifying your cryptocurrency portfolio is a good way to minimize risk, but it's important to remember that correlation between cryptocurrencies is high. During market corrections, the value of many coins tends to move in the same direction. Therefore, diversification does not guarantee protection against losses. It's important to balance your portfolio with both high-risk and low-risk coins based on your risk tolerance.

3. Don't let emotions take over: Emotional decision-making can lead to irrational investment decisions. It's essential to stay level-headed and avoid making decisions based on fear, greed, or regret. It's natural to feel emotionally attached to your investments, but it's essential to keep your emotions in check when making investment decisions.

4. Don't invest more than you're willing to lose: Investing in cryptocurrencies can be risky, and it's important to invest only an amount you're comfortable losing without causing emotional stress. By setting a clear investment limit, you can avoid emotional stress when the value of your portfolio fluctuates. A healthy mindset towards cryptocurrency investing is finding the point where you would feel uncomfortable losing 50–75% of the value but not put you on an emotional rollercoaster.

Remember, a well-rounded approach to crypto investing can lead to success without causing emotional distress. Keep these lessons in mind and stay grounded on your crypto journey.

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Moonbit is a digital platform that helps people invest in cryptocurrency wisely. It uses a variety of data sources to build a portfolio that balances risk and rewards, making it easier for investors to succeed with their crypto investments, no matter the size.