Penny Cryptocurrencies is an ideal prospect for small investors who don’t have a lot of cash to put in at the initial stage. Many of us still remember these outstanding returns on blue-chip cryptocurrencies (mainly LTC, BTC, and ETH) back in late 2017 when prices squeezed into the upside and made numerous people rich in a matter of several days. Bitcoin itself soared up to $20k+ clearly making its run from literally cents (.25-.30c) per coin, which is an incredible result in the entire industry (not sure we can see that again). Luckily, we are now on the verge of a new wave where penny cryptos may take the lead going forward.
Penny cryptocurrencies are like regular penny stocks that cost a fraction of a token/dollar. That actually gives plenty of chances to ride the wave of profit without missing the boat given that you can purchase many coins for, let’s say, as low as $100. However, penny cryptos are not always pointing at the upward moves and we should be really looking at their supply and demand curve. Let’s take a closer look at the following example: RIPPLE XRP price is currently hovering around $0.55 with Market Cap of $21 billion. The law of supply states that if the price goes up – so does the supply and vice versa. In our case, supply is high – hence the value of the coin is low mostly due to unlimited supply flow (although large market cap has higher probability of upside changes). All those BTC alike coins have spiked because of the regulated supply – hence massive demand.
As you might have guessed, penny cryptocurrencies are also volatile with thin liquidity and lower volumes and yes, they are very cheap. Indeed, you may invest in a few of them that will make you reach in one day but just one wrong investment can wipe out all your hard-earned money in one day, too. Do you remember the lure of penny stocks trading? When the $0.5 share jumps into the $1 mark – you will get a 100% return and hit the jackpot! In short, penny cryptocurrencies have the same thing. But if you look back in history, especially year 2017, only a handful of coins hit all-time highs and caused an overwhelming demand while the rest burned hard 99% of the investors.
The truth is, it doesn’t really matter if you buy a $100 fraction of XRP, LTC or BTC – it’s just a share of a coin. The only reason why you want to have them is future potential and constant growth. If BTC gets a big dump, and everyone gets rid of it for a couple of hours and there is investor still holding the coin in his portfolio, the likelihood of pullback is high as the excitement about the #1 crypto restores over time. On the other hand, a newly launched penny cryptocurrency that is hyped but not popular among coin investors, won’t make a pullback after the forces decided to dump it as no buyers will come along to get the bags.