Good morning!
Like many new investors, engaging in the cryptocurrency markets, I too have been making an effort to improve the financial situation of my family. Also like many crypto investors, I've been watching the "penny" cryptos rise and rise and rise. Why is this & is this the best way to maximize your investments?
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Well, yes and no. Here's the catch: If you spend $25.00 on a crypto that costs $0.25 and it goes up 30%, you would make the same amount of money if you had bought $25.00 with of a cryptocurrency valued at $25.00 per coin, that also went up 30%.
In short, don't be fooled by the low cost per coin - you will make the most returns on your investment, if you own the coins that enjoy the largest percentage of gains, regardless of their price per coin at the time you purchase it.
Of course, with many people pursuing the "pennies" we are seeing significant gains across all of the low cost cryptos. This is frustrating traditional investors who are trying to forecast gains using rational, traditional metrics - all which fail to track the whims of us wonderfully imperfect human beings. So by all means, do not avoid the pennies, just because you think the largest gains to come are only in BTC, ETH, and / or LTC.
Last week I did an experiment, in which I logged all of the low cost cryptos in the top 100. Then I looked at their recent performance over the previous 7 days. It was fairly easy to identify which ones were getting ready for some gains, based upon previous gains being followed by a healthy retracement of the cost, as people sold to realize their profits. I picked SNT, FUN, & SUB as the likely candidates and sure enough, over the next week they realized significant gains. Pretty much, all of the penny cryptos are rapidly becoming dollar cryptos as everyone jumps into them, hoping for the most significant gains.
In this image, I've sorted out the least expensive coins and we indeed see, a lot of green!
Compared to the top 12 coins, where we encounter more red.
This is not financial advice. Play the market however you see fit. Make sure, however, that you are not fooling yourself that a penny will earn you more than any other crypto just because of it's low price per unit. The most important thing, when it comes to earnings on your investment is identifying the coins that will see the most percentage of GAINS moving forward, and this will most certainly not be limited to the cheap or new cryptos - although there may well be a preponderance due to our disdain for math & enjoyment of low price points.
Cheers & happy crypto hunting!
Yea right now, since more volume of money is pouring in, going into the cheap alt coins work to make those quick gains. But after the hype and mania die down, it comes down to the coins with value that will retain their value, the others will be dumped. For me, ETH is a long-term hold.
Thanks for the advice!
Thanks, This confirmed alot for me.
Thanks for the very good advice! I myself am not keen on rushing for everything that is sparkling! Maybe I am a little old fashioned and always try to learn as much as possible into what I'm stepping. I simply don't want to come out "dirty" ;)