Sub $1 cryptocurrencies are attractive investments for extremely risk-tolerant investors, as these digital assets are even more volatile than blue chip cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH). While buying up these small altcoins may be profitable, you shouldn't invest more than you’re willing to lose.
What are Altcoins?
While the term altcoin refers to any cryptocurrency other than Bitcoin, most investors don’t refer to Ethereum as an altcoin. This is because of Ethereum's robust ecosystem of non-fungible tokens (NFTs), decentralized applications and Ethereum-based tokens. Let’s take a look at the different types of altcoins available on the market today.
- BEP-20 tokens are altcoins on Binance Smart Chain. These tokens, like SafeMoons and CumRocket, are some of the highest-risk investments in crypto. Generally speaking, these projects won’t last in the long term, and you should treat these investments as a short-term gamble.
- ERC-20 tokens are cryptocurrencies on Ethereum’s network. There are plenty of great projects on Ethereum, like Uniswap, Compound and yearn.finance, which all have great use cases. However, anyone can create an ERC-20 token relatively easily, so make sure that the token you’re investing in is legitimate.
- Native blockchain tokens are cryptocurrencies that use their own blockchain. Some large altcoins that run on their own blockchain include Dogecoin, Litecoin and XRP.
- Smart contract altcoins are blockchains that host code on their blockchain to utilize decentralized applications. The largest smart contract blockchain is Ethereum, but Polkadot, Cardano and Solana are all notable competitors.
Market Capitalization Versus Token Price
If you take away 1 thing from this article, it should be that market capitalization is far more important than token price. Just because a token is inexpensive at a per token price doesn’t mean that the valuation of the cryptocurrency project is also cheap.
For example, yearn.finance trades at $33,000 per token, but its market cap is just $1.2 billion. In contrast, Dogecoin (DOGE) trades at $0.21, but its market capitalization is over $27 billion because of the enormous amount of DOGE in circulation. So, it’s actually harder for Dogecoin to double in price than it would be for yearn.finance to do so.
Investing in Penny Cryptocurrencies
Before investing in cryptocurrency, you should do your own research. Some projects have great potential, while others will likely be worthless in the years to come. Small market cap altcoins are even riskier than large cryptocurrencies, so invest accordingly.
Best Penny Cryptocurrencies
Here’s our list of the best penny cryptocurrencies. The purpose of this list is to bring attention to inexpensive cryptocurrencies with large growth potential. All the coins on this list are within the top 200 most valuable cryptocurrency projects, so they’ve already seen some large developments and user adoption.
- The Graph (GRT) is trading with a market cap of just over $1 billion. The Graph indexes data from blockchains, which can be helpful for developers and users alike. You can think of GRT as the Google of blockchains.
- Shiba Inu (SHIB) is the least expensive token on this list, trading at far less than 1 cent. However, it’s the most valuable cryptocurrency project on this list, with a market cap of more than $4.6 billion. Shiba Inu is an ERC-20 token that has gained attention after releasing ShibaSwap, its decentralized exchange. Because of the high supply of SHIB, it’s literally impossible for Shiba Inu to reach $1 per token, as it’d take more money than there is in the economy to reach this price.
- Decentraland (MANA) is a virtual reality world built on Ethereum’s blockchain. It’s seen a large growth in users, and you can buy and sell plots of land on Decentraland. MANA is currently trading with a market capitalization of $1.7 billion. If you're bullish on non-fungible tokens, then Decentraland is a great way to gain exposure to the technology without actually buying NFTs.
- Basic Attention Token (BAT) is an ERC-20 that is used to reward users for their attention when seeing advertisements. BAT works alongside Brave Browser, which pays you for using its search engine. BAT is trading with a market cap of over $400 million.
- The Sandbox (SAND) is a project focused on bringing the gaming industry together with blockchain technology. The Sandbox lets users earn NFTs for playing games. The virtual world game is similar to decentraland, as users can monetize and develop virtual real estate within the game. The Sandbox is currently trading with a market cap of over $2.5 billion.
Cryptocurrency Exchanges for Penny Cryptos
Because these altcoins are relatively small, not all crypto exchanges support these tokens. Depending on which crypto from this list you want to invest in, you may need to make an account with a new cryptocurrency exchange. Coinbase supports Basic Attention Token, The Graph and Decentraland.
Binance supports all the tokens on this list except Shiba Inu, and it’s the largest crypto exchange in the world. If you’re looking to get access to more variety of cryptos, then look no further than Binance.
If you’re looking to invest in Shiba, the best way to do so is on Voyager. Its mobile app and low fees make it a go-to option for many crypto investors.
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Crypto Price Movements
The crypto markets have seen a sharp correction since their peak in early May, but many investors see this as an opportunity to accumulate crypto at lower prices. If the past is any indicator of future performance, you can’t go wrong HODLing your cryptocurrency over the long term.
Unlike stocks, the cryptocurrency markets are open 24 hours a day, 7 days a week. If you don’t want to constantly monitor the crypto markets, you should consider using CryptoPro. CryptoPro is a free-to-use portfolio tracker, and it can send you notifications when there are major spikes in volatility. You can adjust these notifications, so you’ll only get notified on price movements that are relevant to your portfolio.
Bitcoin vs Altcoins
Most cryptocurrency investors hold Bitcoin as well as altcoins. While altcoins are attractive investments because of their future price potential, they’re far more risky than Bitcoin. Because Bitcoin is well established and has institutional support, it’s unlikely that we’ll see Bitcoin die. However, altcoins with specific use cases may not end up being viable in the long term, so only invest money in altcoins that you’re able to lose.
Frequently Asked Questions
Can you make money investing in crypto?
Yes, you can make money with cryptocurrency. However, the volatility of crypto involves a high risk.
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