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Should you buy one of these cryptocurrencies while they cost less than $1?
If you’re looking for potential bargains in the cryptocurrency market, the good news is that a surprising number of the most popular cryptocurrencies are trading for less than $1. In fact, some of them are trading at discounts of up to 80% from all-time highs. On the surface, this would seem to make them buy screaming, right?
The answer isn’t as obvious as you might think. Let’s take a closer look to see if any of these cryptocurrencies trading for under $1 are worth buying right now.
XRP
XRP (CRYPTO:XRP) is the seventh largest cryptocurrency, with a massive market capitalization of $27 billion. However, XRP is down 21% for the year and is currently trading for just $0.48. At one time, XRP traded as high as $3.84, but that was back in January 2018. During the previous cryptocurrency bull market rally, XRP didn’t even come close to reclaiming its all-time high.
While XRP has a number of potential catalysts, the only one that really matters right now is the resolution of its long-running court case with the SEC. According to the SEC, XRP is a security, not a cryptocurrency, and this has obvious existential implications.
That said, cryptocurrency bulls are firm believers Ripple (the creator of the XRP token) will emerge victorious, causing the price of XRP to skyrocket. That may be true, but you’re also taking on a lot of regulatory risk. Don’t forget: the SEC is trying to impose a gigantic $2 billion fine on Ripple. Even if Ripple wins the lawsuit, it could still owe a large amount of money. So there is no guarantee that XRP will ever regain its appeal from more than six years ago.
Dogecoin and Shiba Inu
Both Dogemoneta (CRYPTO: DOGE) e Shiba Inu (CRYPTO: SHIB) they are meme coins, which basically means that they are completely disconnected from the world of fundamental financial analysis. As meme coins, they have little to no utility and there is no good way to value them.
Although both meme coins are up more than 50% during the year, it is not as impressive as it seems. Dogecoin is trading for just $0.14 these days, while Shiba Inu is trading for the ridiculously low price of $0.00002.
Dogecoin and Shiba Inu are purely meme coins. Image source: Getty Images.
While Shiba Inu has taken some steps to add utility for blockchain users, it suffers from a huge oversupply of coins. There are 589 trillion Shiba Inu coins in circulation, so the mathematical chances of this cryptocurrency reaching the $1 level are almost zero. A price of $1 would imply a market capitalization of $589 trillion, which is about 15 times larger than the stock’s current value. S&P500!
The outlook for Dogecoin is not much better. This meme coin has been around for more than a decade and has never managed to cross the $1 mark. This is despite the fact that billionaire Elon Musk has been a high-profile supporter of this coin. During the height of meme coin popularity in 2021, Elon Musk also appeared during a comedy sketch on Saturday Night Live as “The Dogefather.” Unfortunately, Dogecoin’s value has dropped by 80% since then.
The story continues
Cardan
Finally there is Cardan (CRYPTO:ADA), which was once almost an equal rival Ethereum (CRYPTO: ETH). The two cryptocurrencies share much of the same blockchain DNA, as Cardano co-founder Charles Hoskinson was also a co-founder of Ethereum. But Cardano never delivered on its early promise, and now appears at risk of being eclipsed by new blockchain rivals like Solana.
Add in the fact that the SEC seems to be on the fence about whether or not Cardano is a stock, and you can see why Cardano’s price seems permanently frozen below the $1 level. There’s not much to get excited about these days, although Cardano has had some success with a recent foray into decentralized finance (DeFi). Cardano currently trades for just $0.42 and is down 86% from its all-time high.
Be careful of the cryptocurrency bin in the basement
There is a lesson to be learned here. Looking for high-quality cryptocurrency trading for under $1 is similar in many ways to looking for a good deal in the “clearance” section of your favorite store. You most likely won’t find what you’re looking for in the right size or color. And if you find something you like, it probably has some hidden flaw that you don’t discover until you get it home.
So watch out for the cryptocurrency bin in the basement. Just because a cryptocurrency trades for less than $1 doesn’t mean it’s a “bargain.”
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Domenico Basulto has positions in Cardano, Ethereum and Solana. The Motley Fool has positions and recommends Cardano, Ethereum, Solana and XRP. The Motley Fool has a disclosure policy.
Should you buy one of these cryptocurrencies while they cost less than $1? was originally published by The Motley Fool