The world has been full of unexpected events since 2019, and it’s easy to become numb to the constant flow of news. But behind each headline, there are real people whose lives were changed because of one wrong step. If you want to avoid becoming the “main character” in a crisis story, it’s worth taking some time to learn how to steer clear of common pitfalls.
This guide is based on my personal experience and observations. It is by no means exhaustive—the world is full of risks I haven’t mentioned. But if even one point helps you avoid a mistake, I’ll be glad. Also, some ideas here may overlap with my earlier writings. Think of it as evolution, not contradiction. I don’t claim to have all the answers. If anything offends you, please know it comes from a place of good intention.
Within the Crypto Space
Say No to Leverage
I can’t stress this enough. The crypto market is extremely volatile—statistically about three times more volatile than the NASDAQ. That means even spot trading carries inherent risk. Adding leverage, whether through futures, loans, or even borrowing against personal assets, multiplies that risk exponentially.
Leverage isn’t just trading with borrowed funds—it includes using credit cards, mortgaging property, or investing money earmarked for other purposes. These are all forms of gambling. And in an unfair game, the odds are never in your favor. Leverage also distorts your psychology, leading to poor decisions and higher costs. In short, once you choose leverage, you’ve likely already lost.
My biggest loss in crypto came from over-leveraging during a major exchange hack. That experience taught me a painful lesson and led me to close all my leveraged positions for good.
You don’t have to invest in crypto. But if you do, only use “idle money”—funds you can afford to lose or not touch for years. The stories of leverage-made millionaires are survivorship bias. There’s no need to become a cautionary tale.
Don’t Trade Crypto Full-Time
The ideal trader buys at the bottom and sells at the top. But no one gets it right every time. Even if you stare at charts 24/7, you probably won’t outperform a structured, disciplined strategy.
I use a ladder strategy—allocating buy and sell orders at different price levels. It requires minimal daily attention. In the latest market cycle, I used less than 8% of my total capital and still increased my crypto holdings by over 10%. I also kept a healthy amount of cash on hand.
Most of my trading is rule-based. Occasionally, I act on market sentiment—but even then, it’s backed by a plan. I see no reason to trade full-time. In fact, some of my best investments were made casually. Going “pro” often leads to overconfidence and higher risk—something even large institutions aren’t immune to.
If you’re not a professional, don’t quit your job to trade. Find ways to earn stable income. Invest on the side. Don’t use crypto as an excuse to avoid work.
Secure Your Assets
You might leave coins on small exchanges for arbitrage, lend them to friends, or send them to wrong addresses. Maybe you’re yield farming on platforms with unclear risks. Any time your crypto is held in an uncertain environment, you risk losing it.
I keep about 95% of my holdings in cold wallets (with private keys stored in multiple secure locations), 4.5% on Mixin, and 0.5% on exchanges. This strategy works for me—consider building your own.
Avoid Cashing Out Frequently
I strongly recommend separating crypto investments from daily living expenses. Even though I’m based overseas where converting crypto to fiat is easier, I still avoid frequent withdrawals.
In regions with strict crypto policies, cashing out can lead to frozen bank accounts. I know someone who spent more unfreezing their account than the amount they initially withdrew.
Crypto investing is a long-term game. Unless absolutely necessary, avoid moving in and out. Hold until regulations improve or you can spend crypto directly abroad. 👉 Explore secure long-term holding strategies
Reassess Your Portfolio Allocation
A few years ago, I shared a portfolio strategy that now feels outdated. Today, my view is clearer: Bitcoin’s value as a store of value is established; the utility of other blockchain applications is still uncertain.
I hold over 90% in Bitcoin. The rest is spread across a few other assets—including Ethereum. I remain highly cautious about altcoins.
Your allocation should reflect your risk tolerance and goals. But I believe everyone should hold at least 50% in Bitcoin. Recently, I sold all my SOL at a loss and converted it to Bitcoin after losing confidence in the project’s management. I’d rather not bet on hype or pumps.
Stay curious about new projects, but always be cautious.
Quick Additional Tips
- Do your own research. Don’t blindly follow trends—it’s okay to miss out.
- Think independently. Don’t rely on “groups” or influencers—they might all be actors.
- Never persuade others to buy crypto. If they profit, you won’t benefit; if they lose, you’ll be blamed.
- Avoid “guaranteed return” programs. If it sounds too good to be true, it is.
- Stick to liquid assets. If it’s hard to buy, it’ll be harder to sell.
Beyond Crypto
Reduce Real Estate Exposure
The global housing market is entering a downward cycle—especially in certain regions. Beyond your primary residence, extra properties can become liabilities, particularly if they’re mortgaged. Remember: don’t buy unless necessary.
Avoid Flaunting Wealth
These are tough times for many. If you’re doing well, avoid drawing attention. Not everyone watching has good intentions.
Keep Some Cash at Home
Recent banking incidents have made withdrawals and transfers more difficult in some areas. Your money might not be as accessible as before. Keep a reasonable amount of cash at home in a safe place.
Cut Down on Unnecessary Socializing
Be aware of the broader social and economic environment. Prioritize meaningful connections and avoid wasteful gatherings.
Stay Healthy
Tough times require resilience. Good health is your greatest asset in facing future challenges.
Frequently Asked Questions
What does “idle money” mean in crypto investing?
Idle money refers to funds you can afford to lose or not use for several years. It should not include emergency savings, borrowed money, or income meant for daily expenses.
How do I start with a ladder strategy?
A ladder strategy involves placing buy or sell orders at pre-defined price levels. This removes emotion from trading. You can begin by setting incremental orders below and above the current price based on your target allocation.
Why is Bitcoin considered a safer store of value?
Bitcoin has the longest track record, highest liquidity, and strongest network security among cryptocurrencies. Its scarcity and decentralized nature make it a digital equivalent of gold for many investors.
What are the risks of keeping crypto on an exchange?
Exchanges can be hacked, shut down, or become insolvent. While major platforms have improved security, you don’t fully control your assets until they’re in your own wallet.
How much cash should I keep at home?
This depends on your personal needs and local circumstances. A good rule is to have enough to cover basic expenses for 1–2 months in case of emergencies.
Is it safe to use cold wallets?
Yes, if you follow best practices. Use hardware wallets from reputable brands, back up your seed phrase securely offline, and never share your private keys with anyone.
I wish you safety and clarity in your decisions.