While it is no one’s place to tell you what to buy, there are some coins you should probably avoid as a first purchase. Be wary of any cryptocurrency you’ve been recommended that’s ‘certain’ to go up in price or that promises a ‘guaranteed return’. Just because a friend made spectacular profits off a particular coin doesn’t mean you should follow their example – in fact, it’s often a sign that you should steer clear.
If you are pondering dipping a toe into the waters of cryptocurrency – a move that is likely to be followed by full immersion – you’re hopefully doing so for reasons other than to ‘get rich quick’. While it is likely that certain crypto assets will appreciate in value significantly over the coming years, others will stagnate or may even die off altogether. For every chart looking like this:
Cryptocurrencies are still relatively new, and as such can be volatile. As a general rule, the smaller the market cap of the coin (i.e the price per coin multiplied by its total circulating supply), the higher the volatility. This is because small market cap coins have much lower liquidity, meaning that even a modest buy or sell order can alter its price, and have a smaller community of users. Bitcoin, on the other hand, can be regarded as the gold standard of cryptocurrency, having been there from the start and boasting millions of users.
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