• CROX ROAD
  • Posts
  • Before You Buy Bitcoin, Read This: 2 Investment Traps to Avoid

Before You Buy Bitcoin, Read This: 2 Investment Traps to Avoid

Thinking about investing in Bitcoin? Learn the 2 biggest traps that can derail your crypto journey—FOMO-based decisions and risky Bitcoin proxy stocks. Discover how to avoid costly mistakes and invest with confidence.

Bitcoin has evolved from a niche digital currency into a recognized asset class that has entered the portfolios of major institutions and everyday investors alike. With headlines boasting meteoric rises and mainstream platforms making it easier than ever to buy crypto, the pressure to join the movement can feel overwhelming. But behind the allure of big gains lies a complex and often misunderstood landscape.

Financial reporter Christine Ji recently shared her own experience with Bitcoin investing, offering a real-world example of how even smart, informed individuals can fall into common traps. Her story isn’t unique—and that’s what makes it essential reading for anyone thinking about entering the crypto space. In particular, Ji highlights two investment missteps that can turn a promising investment into a costly regret.

Table of Contents

Trap #1: Letting FOMO Drive Your Decisions

FOMO—Fear of Missing Out—is not a strategy. It’s a psychological trigger that often leads to poor timing and rushed choices. Christine Ji openly admits that her initial investment was based less on financial analysis and more on the buzz surrounding Bitcoin's surge in value. She bought in because others were doing it, fearing she might miss her chance at major returns.

“In hindsight, I realize I committed the classic retail investor impulse: Buying in because of FOMO,” she wrote in her report.

This is a common pitfall, especially in crypto markets that are highly volatile and influenced by media hype, social media chatter, and online influencers. Ji invested in two assets:

  • BlackRock’s iShares Bitcoin Trust ETF (IBIT), which is designed to track the price of Bitcoin, and

  • Semler Scientific (SMLR), a healthcare technology company that had added Bitcoin to its balance sheet.

While IBIT performed relatively well in the short term, Semler’s stock declined post-investment—revealing that excitement and emotion don’t guarantee solid returns.

Why This Matters:

FOMO clouds judgment. It makes people buy high—when prices are inflated due to hype—and often sell low, out of panic when the price drops. Crypto markets move quickly, and if you're chasing trends, you’re likely too late.

Many retail investors enter the market at its peak because it seems like “everyone else is making money.” Unfortunately, this herd mentality rarely leads to sustained profits.

What to Do Instead:

  • Pause and reflect. Before buying, take a moment to understand why you're making the decision. Is it based on a plan or on emotion?

  • Develop a long-term strategy. Rather than jumping in all at once, consider dollar-cost averaging (investing a fixed amount over time) to reduce the impact of volatility.

  • Focus on your goals. Are you looking for long-term value growth, short-term gains, or portfolio diversification? Your strategy should align with your financial objectives.

Avoiding FOMO isn’t just about missing out on losses—it’s about building discipline, which is the cornerstone of successful investing.

Trap #2: Confusing Bitcoin Exposure with Company Stock Performance

Another key mistake Ji made—and one that’s not widely discussed—is investing in stocks of companies that hold Bitcoin, assuming they will move in lockstep with Bitcoin’s price. This seems logical on the surface. If a company owns a large amount of Bitcoin, wouldn’t its stock rise as Bitcoin rises?

Not necessarily.

“When you buy into a Bitcoin treasury company, you’re also inheriting all of its company-specific risks,” Ji explained.

Take Semler Scientific (SMLR) as an example. While the company holds Bitcoin as part of its treasury, it operates in the healthcare technology sector, which comes with its own business risks—regulatory issues, market competition, R&D costs, and operational challenges. These factors can (and often do) overshadow any gains from Bitcoin holdings.

Investing in a company like Semler or even more well-known firms like MicroStrategy exposes you not only to Bitcoin volatility but also to the performance of their core businesses, which may have nothing to do with crypto.

Why This Matters:

When you invest in a Bitcoin proxy—a stock that is associated with Bitcoin due to its treasury—you are not actually investing in Bitcoin. Instead, you're exposed to a hybrid risk: Bitcoin’s price fluctuations plus company-specific events like lawsuits, executive decisions, product failures, or earnings misses.

This means that even if Bitcoin is surging, your investment might still decline in value due to unrelated factors.

What to Do Instead:

  • If your goal is Bitcoin exposure, stick with Bitcoin. Either buy Bitcoin directly through a reputable exchange or invest in a Bitcoin ETF like IBIT, which is specifically designed to track Bitcoin’s performance.

  • Avoid making assumptions. Just because a stock mentions Bitcoin in its news releases or balance sheet doesn’t mean it will perform like Bitcoin.

  • Do your homework. If you still want to invest in Bitcoin-related stocks, research the company’s core business, management team, and market fundamentals.

Think of it this way: You wouldn’t buy stock in a pizza company just because they own a gold bar in their office safe—so why buy a healthcare stock just because it holds crypto?

Conclusion

The most successful investors treat crypto no differently than they do any other asset class—they research it, understand it, and invest based on strategy, not social pressure.

Christine Ji’s story is a powerful reminder that:

  • Emotion-driven investing—especially based on hype—can lead to poor timing and disappointing results.

  • Stock proxies for Bitcoin carry additional risks that many investors overlook.

Bitcoin can be a valuable addition to your portfolio, but only if you understand what you’re buying and why you’re buying it. Whether you’re buying Bitcoin directly, through an ETF, or indirectly via company stock, each path has its own set of pros and cons. The more informed you are, the better equipped you’ll be to avoid common traps.

FAQs

What is the biggest mistake new Bitcoin investors make?

One of the most common mistakes is investing based on FOMO (Fear of Missing Out). This often leads to poor timing—buying at market highs and selling during dips—rather than following a thoughtful, long-term strategy.

Is it better to buy Bitcoin or a Bitcoin-related stock?

If you want direct exposure to Bitcoin's price movements, it's typically better to buy Bitcoin itself or a Bitcoin ETF like IBIT. Stocks of companies that hold Bitcoin carry additional risks related to their business operations, which may not correlate with Bitcoin's performance.

What is a Bitcoin proxy stock?

A Bitcoin proxy stock is a company that holds Bitcoin on its balance sheet, such as MicroStrategy or Semler Scientific. These stocks are sometimes viewed as indirect ways to gain Bitcoin exposure, but they come with company-specific risks unrelated to crypto.

How can I avoid emotional investing in crypto?

Set clear investment goals, use strategies like dollar-cost averaging, and avoid making decisions based on hype or social media trends. Educate yourself on the market and treat crypto like any other long-term asset.

What’s the safest way to start investing in Bitcoin?

For beginners, starting with a small allocation through a reputable exchange or a regulated Bitcoin ETF (like IBIT) can be a safer approach. Always research and ensure your crypto assets are stored securely.

That's all for today, see ya tomorrow! If you want more, be sure to follow our X (@croxroadnewsco), Instagram (@croxroadnews.co), Youtube (@thebitcoinlibertarian), Tiktok (@croxroadnews) and nostr - [email protected]

VISIT OUR STORE

The Best Merch For Bitcoin Maxis

Visit Crox Road Store 👉🏻 https://croxroad.store/

FOLLOW US ON NOSTR

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.

You May Also Like

If You Like Our Content And Want To Help Us To Make It Better, You Can Buy Us One (Or More!) Coffee CLICKING HERE

Reply

or to participate.