Can Cheap Cryptos Outperform Expensive Ones?

Can Cheap Cryptos Outperform Costlier Ones?

In the crypto world, one question keeps popping up: Can cheap cryptos outperform expensive ones?

There’s no simple answer. 

Some cheap cryptocurrencies have generated staggering returns, but many others have experienced significant losses. 

Let’s take a look at the factors that drive the performance of cheap tokens and determine if they can outpace their more expensive counterparts.

What’s Meant By a Crypto Being “Cheap” or “Costly”?

When describing a crypto as “cheap” or “costly,” we mean its price in terms of US Dollars. 

For instance, Bitcoin (BTC) was priced at approximately $100,000 per coin in January 2024 1 www.bbc.co.uk https://www.bbc.co.uk/news/articles/cqjz04lv5q9o , while coins such as Shiba Inu (SHIB) sell for a few fractions of a cent. 

But here’s a tip: price doesn’t paint the whole picture.

A crypto’s market capitalization – calculated by its price multiplied with its circulating coins – provides a truer picture of its value. 

For example, SHIB’s price per coin is low, but its marketplace value stands in the billions of dollars, and it’s a big player in the crypto universe. 

So don’t judge a token by its price alone. 

Can Cheap Cryptos Really Outperform Expensive Ones?

The answer is a simple one: yes – but it’s not a certainty. 

Inexpensive coins have room for enormous growth because they have a low starting point. For example, if a $0.01 coin jumps to $1, that’s a 10,000% gain.

But such success tales don’t come about often and usually rely on rampant speculation rather than (or at least as well as) fundamentals.

So while some cheap coins are worth it, your returns might be fleeting and you might have to invest in a lot of different coins to find one that succeeds.

In contrast, coins such as Bitcoin and Ethereum have established track records, clear use-cases, and a lot of popularity already. You can trust them to perform.

They’re not likely to yield record-breaker returns, but they do offer more stable and reliable growth over a period of time.

The lessons of Dogecoin

Dogecoin (DOGE) is an archetypal example of a cheap coin beating an expensive one – at least for a short time. 

In early 2021, DOGE rose from less than 0.01 to over 0.70, fuelled by social-media buzz and Hollywood backers. 

Meanwhile, Bitcoin, growing steadily, posted less impressive returns over similar time.

But DOGE’s gain was largely a guess, and its price then collapsed to about $0.06. Bitcoin, meanwhile, kept its value and continued its steady rise.

The Risks of Buying Cheap Cryptos

Although cheap cryptos can be a temptation, they include high risks:

• High volatility. Low-value coins have wild price fluctuations. A coin that doubles in value one day can tank the following day.
• Liquidity problems. Cheap coins have thin trading volumes, and buying and selling a lot of them can move the price in a big way.
• Fraud and schemes. The crypto universe is full of scams, and cheap coins are most susceptible. Finding a cheap penny crypto requires a lot of research to ensure you don’t get burned.

Final Word

Cheap cryptos can outdo costly ones, but success hinges on utility, adoption, and market mood. 

While low-cost coins have high-potential for gains, they come with high danger, too. 

As a new investor, prioritize investigation, diversification, and long-term prospects over rapid gains.

Don’t forget, the crypto market is unpredictable, but through a proper strategy, you can navigate it effectively.

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