Four things to avoid when investing in crypto in 2025

Cryptocurrency remains one of the most ever-changing and high-profile forms of investment, as a result drawing in millions of investors worldwide. Starting from Bitcoin and Ethereum to meme coins and niche tokens, the digital asset space continues to evolve, offering opportunities and risks in equal measure.

Above all, you need to learn all that you can about the currency you are investing in, the creators of that currency, their goals, and what security they can offer in terms of cash reserves to protect the currency if it suddenly loses value. 

Investment without a solid strategy is a recipe for failure, especially in this fast-paced world of crypto. Planning is more important than anything else.

Before making any purchase, ask yourself:

• Are you in for the long-term or short-term trade? This will help set your psychology and approach to the crypto market right.
• Do you have a clear exit strategy? A lot of investors who had made profit during the past bull run period tend to lose it back to the market during bear times just because they don't have a clear exit plan. A good exist strategy is what helps you know when a particular cryptocurrency is overbought and needs to be sold.
• Have you considered how regulatory changes might affect your holdings? This is also an important factor one must consider before investing in a crypto project, because these regulatory changes do affect the price of a cryptocurrency a great deal.
• Do you understand the fundamental utility of the cryptocurrency?

In 2025, long-term investors must brace for market cycles, while short-term traders need to understand high volatility. Above all, you need to learn all that you can about the currency you are investing in, the creators of that currency, their goals, and what security they can offer in terms of cash reserves to protect the currency if it suddenly loses value. 

Emotional decision-making has no place in crypto investments. The Fear of Missing Out (FOMO) is still one of the biggest traps, leading investors to buy at the peak of market euphoria. An instance is the $TRUMP coin, which was launched on January 17, 2025. Within hours, its price soared over 300%, reaching an all-time high of $75.35 in two days.

However, this surge was short-lived; by January 21, 2025, the price had fallen to $38, and as of today, it stands at $17.83. Any investor who FOMO into buying this coin when its at $75 would have taken a massive loss. On the flip side, panic-selling during economic downturns often results in losses that could have been avoided.

Many influencers and social media personalities continue to hype coins, sometimes with paid promotions or undisclosed affiliations. Avoid basing your decisions on viral posts or YouTube videos promising overnight riches. Instead, focus on:

• Thorough research on the project’s fundamentals
• Market sentiment analysis beyond social media hype
• Historical price trends and technical indicators

If a cryptocurrency has already surged significantly, it may be too late to buy in; if you insistently want to buy in, wait for a possible retracement and buy from there. Instead of chasing trends, look for projects with solid use cases and real-world adoption.

Although the Nigerian SEC has set up a licensing system for cryptocurrency operators and there are other efforts under way to regulate cryptocurrency, most notably in South Africa and the US, the global crypto industry remains largely unregulated. This means that as an investor, you are not protected from scams, fakes, or operators who can simply take your cash and run. 

Before you commit your Fiat to any platform, make sure that you know everything there is to know about the platform you are buying through, and where available, seek advice from the body that regulates crypto in your territory.

Some common scams include:

• Rug pulls: Developers abandon projects after raising funds
• Phishing attacks: Fake websites and emails trick users into revealing private keys
• Ponzi schemes: Unsustainable returns luring in new investors

Protect yourself by:

• Using hardware wallets for long-term storage
• Verifying official websites and social media handles before engaging
• Checking community feedback on platforms like Reddit and Trustpilot
• Using regulated exchanges and platforms with a solid security track record

Whether you are buying stocks, playing the lottery, or betting on a sporting event, any activity that involves risking money in the hope of a return carries the same risk: you may lose all of your money and have nothing to show for it. 

Most people don’t go into crypto investing planning to lose money, and that’s why so many crypto investors end up suffering huge losses.

Crypto investors are more prone to bad investments than those who deal in stocks, because crypto is often sold as a futuristic technology to young people who lack experience in investing. 

In particular, many people fall foul of the number one rule of investment: never use money that you cannot afford to lose.

Allowing your household income to become tangled with your investments is a sure sign of trouble ahead. You should only ever invest using spare money that you could, in theory, afford to give away.

If you don’t have enough spare capital, then wait until you do, rather than being reckless with your essential income. That way, you will be investing from a firm foundation.