The most common beginner mistake in crypto investing
A beginner's biggest mistake is usually not picking the wrong crypto. The most common mistake is putting too large an amount in at once, or worse, using borrowed money.
The crypto market still swings much more sharply than, for example, the stock market. That shows even in a well-diversified crypto portfolio.
Diversifying crypto investments on three levels
| Level of diversification | What it means in practice |
|---|---|
| Over time | Smaller amounts regularly instead of one large lump sum |
| Between cryptos | Not everything in one, especially not in a smaller, experimental project |
| Between asset classes | Crypto as part of a wider portfolio, not the only investment |
Of these three, diversifying over time is the easiest to do yourself. It mainly takes the discipline to stick to the plan whatever the market mood.
Diversifying between coins takes more thought, because most of the market's thousands of projects never reach significant use.
Example: why diversification doesn't always protect you in crypto
Imagine an investor splits €1,000 across five coins at the top of the market. If the market falls broadly, all five can fall at the same time, and a small project can lose its entire value. Diversification reduces the risk of one failed project taking all your capital, but it doesn't prevent losses when the whole crypto market falls. The example is illustrative, not a real portfolio.
Identifiable risks of investing in crypto
| Risk | How can you reduce it? |
|---|---|
| Market risk (the whole crypto market falls) | Only invest an amount you can afford to lose |
| Project-specific risk (a single coin fails) | Diversify across several more established projects |
| Custody risk (lost keys, exchange problems) | See our guide to choosing a crypto wallet |
Should I invest only in Bitcoin and Ethereum or more widely?
There is no single right answer. Bitcoin and Ethereum are the most established and liquid coins on the market, which makes them a lower project-specific risk than a smaller, less known coin. That still doesn't make them "safe" in the real sense of the word.
Regulation and consumer protection: what to prepare for
Regulation of crypto-assets has developed quickly with the EU's MiCA regulation, but that doesn't mean the risks have disappeared; see is crypto legal in Finland.
The EU's financial supervisory authorities have repeatedly reminded consumers that crypto-assets remain a high-risk investment despite regulation. Regulation mainly increases the responsibility and transparency of operators; it doesn't remove the market risk itself.
The crypto sector is also more closely tied to politics than many traditional asset classes, and that is a risk of its own. According to the Finnish broadcaster Yle (in Finnish), US President Donald Trump earned more than $1.4 billion from his own crypto ventures in 2025. When political power and commercial crypto ventures intertwine like this, it can steer regulation in a direction that doesn't necessarily serve the ordinary investor.
When investing in crypto is not for you
- If you need the money soon: short-term swings can force you to sell at exactly the wrong moment.
- If you finance crypto investments with debt: gambling with borrowed money on something this volatile is a particularly bad combination.
- If a fall of more than 50% would keep you awake at night: this has happened several times in history, sometimes within a short period.
- If decisions are driven only by hype or social media: without your own understanding of the risks, it is easy to panic whether the market rises or falls.
Think about crypto taxes in Finland in advance
One thing is often forgotten: every sale or swap is a disposal that can have tax consequences. This also applies to swaps from one crypto to another, not only to selling for euros.
Read our guide to crypto taxes in Finland before your first sale, and record your purchase details from the very start.
Investing in crypto: frequently asked questions
How many different cryptocurrencies should a portfolio hold?
There is no single right number. Too many small positions make tracking difficult and increase transaction costs, while too few expose you fully to the failure of a single project. A workable approach for many is to keep most of the portfolio in a few more established coins and only a small part in smaller, more experimental projects.
Can a crypto investment that became worthless be deducted in Finnish taxation?
In Finland, the loss of a cryptocurrency's value can under certain conditions be treated as a capital loss if the asset actually disappears or its value proves permanently to be zero, for example when a project shuts down completely. Practical situations vary case by case, so check your own situation with the Tax Administration or in our tax guide.
How can I tell in advance whether a crypto project is risky?
A few quick checks help: does the project have a working product rather than just a promise, how concentrated is the token distribution, is the team public, and is liquidity so thin that a large sale would crash the price? No single sign guarantees anything either way, but several red flags at once should be taken seriously.
Is investing in crypto comparable to investing in shares?
Not directly. A share's value is linked to the company's business, cash flow and profit, while the value of most cryptocurrencies rests mainly on demand, scarcity and user growth without a corresponding cash flow. This is one reason why the crypto market is structurally more volatile.
Should I invest borrowed money in several cryptos at once?
We don't recommend it. A loan has to be repaid with interest regardless of how the investment performs, and spreading it over several coins doesn't remove that risk; it only splits the same borrowed money across several volatile assets.
How much money do I need to start investing in crypto?
In practice you can get started with a few tens of euros on most Finnish exchanges. A small first amount is a good way to learn the whole process (identification, purchase, storage) before investing larger sums. See how to buy crypto in Finland.
Can diversification remove the risks of crypto investing completely?
No. Diversification reduces the impact of a single project failing on the whole portfolio, but it doesn't remove market risk: when the whole crypto market falls broadly, a well-diversified crypto portfolio typically falls too.
Kryptoluotsi.com's content is general information, not investment advice.
