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How Dogecoin is creating a frenzy for the next big cryptocurrency and why experts advise caution

By on May 7, 2021 0

Dogecoin, a cryptocurrency created as a joke, increased its price by more than 12,000% and hit a record high of 69 cents per token this week. Bitcoin briefly climbed to over $ 60,000 each last month, more than doubling its price since the end of 2020. These rallies are prompting individual investors to look to new cryptocurrencies such as DigiByte, VeChain and SafeMoon at the same time. looking for cheaper alternatives that could be. the next to soar. Here’s what you need to know.

Key points to remember
1. The rise of new digital assets is in part fueled by online speculation.

The trend is part of a larger investing frenzy that has also pushed up the prices of other assets, including stocks and silver. But a large part of cryptocurrency betting is due to internet chatter and fear of missing out. This includes celebrities with great social media following. Rapper Lil Yachty, who has five million Twitter followers, tweeted last month to say: [SafeMoon] was on the rise, ”referring to the new cryptocurrency which has gained more than 20,000% since its launch last March.

2. Investors view new cryptocurrencies as a cheap investment with the potential for big gains.

Stephen Roach, a 39-year-old cinematographer in London, said his investment of around $ 950 in VeChain, a cryptocurrency project from China, is now worth $ 71,000. (VeChain’s price has risen over 900% this year, giving it a market value of around $ 13.3 billion.) Part of the cryptocurrency’s appeal was its cheapness, a Mr. Roach said. “It never needs to hit $ 50,000 a coin to change the life of you because it’s less than a dollar. All he has to do is come up with $ 10. “

3. Experts warn against possible losses, fraud or taxes.

Some experts say cheap crypto could be a red flag. “Cheap doesn’t mean a good deal, it’s only a good deal if it increases. If it’s cheap, it’s also potentially because it’s worthless, ”said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, UK asset manager and brokerage. Many of these digital assets also have low liquidity, said Charles Hepworth, chief investment officer at GAM Investments – which means if sentiment turns for a cryptocurrency, investors won’t be able to sell it or get their money back. Another potential risk is fraud, as cryptocurrencies already lack oversight by US regulators.

4. The previous “alt-coins” quickly sold out.

Smaller cryptocurrencies tend to be even more volatile than bitcoin, which often goes up in price by more than 10% in a single trading session. This can lead to large and rapid losses for investors. A previous generation of these smaller ‘altcoins’ like Litecoin and PinkDog rose in 2017. Many of them either failed to make money for their backers, or collapsed altogether.

Read Caitlin Ostroff’s original article here.

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