Trading or investing in cryptocurrencies has never been advisable for anyone seeking a quiet life. These are assets that can surge one minute and dive the next, and market sentiment towards them can run hot before abruptly turning not so much cool as Arctic.
No surprise there, say critics of cyber money in all its forms. To them, cryptocurrencies have zero underlying value, indeed, buying them is not so much a trade or an investment as an exercise in the suspension of disbelief.
And it is true that cryptocurrencies are prone to react, even over-react, to fears of fraud, of burdensome regulation and of cyber-theft by computer hackers, among other things.
Giants bounce back
The recent picture has been of a storming 2017, a dire 2018 and something of a revival earlier this year. More recently still, this revival has lost momentum, so should traders buy on the dips in time-honoured fashion and, if so, which cryptocurrency offers the best value?
One that apparently does not is the best-known of them all, Bitcoin. Each Bitcoin is currently changing hands at $9,958.73, against $10,577.60 a month ago on 1 July. A year ago, Bitcoin, like other cryptocurrencies, was in the doldrums, down at $7.603.99 on 1 August 2018.
This, as we shall see in our search for the cheapest cryptocurrency, has been something of a pattern in the bigger currencies, with a becalmed price a year ago, an upswing earlier this year followed by another price sag. It was the same story with Litecoin, which currently trades at $96.88, having been $122.66 a month ago on 1 July and $77.64 a year ago, on 1 August 2018.
For someone looking for the cheapest cryptocurrency offering the best value, this is the sort of pattern they would wish to see, given the graph suggests the currencies in question have shown the resilience to bounce back from the dog days of 2018 and remain well above the levels of 12 months ago, but have lost a little ground recently – offering what would seem to be good value.
The problem is that these crypto-coins are far from cheap in nominal terms, in other words there is a hefty price tag attached to each of them. Somebody being asked to pay nearly $10,000 for one Bitcoin may take some persuading that this is the cheapest cryptocurrency, or at least one of them.
Ethereum’s downward momentum
The same is true, although to a lesser extent, for a near-$100 price ticket for every Litecoin.
So, what we are looking for is a modestly priced currency that mimics the recent trading pattern of giants Bitcoin and Litecoin. This, however, is easier said than done.
Too often, the smaller currencies have behaved like Ripple, which traded at $0.4473 a year ago, on 2 August 2018, at $0.3945 a month ago on 2 July and is currently worth $0.3134. In other words, the decline that set in during the last 12 months would seem yet to run its course.
It could be that the turn is coming and that Ripple may emerge as the cheapest cryptocurrency. But given the inherent riskiness of the entire asset class, why add an extra layer of risk to your trading decisions?
Nor is Ripple alone. Look at Ethereum, trading at $419.60 on 1 August 2018, $294.15 a month ago, on 2 July and currently worth $218.70. That’s a near-30% plunge, quite a drop given the market is supposed to have been recovering.
Its scale suggests the momentum in the Ethereum price is still downwards. Quantum’s drop during the past 12 months is more vertiginous still, from $6.80 on 1 August to $2.96 now, a 56% decline.
Stellar has also taken a beating, from trading at $0.2727 on 1 August last year to $0.1082 on 1 July and now $0.0835. No sign of a bounce-back there.
Steady price erosion was on display also at TRON, from $0.0327 on 2 August 2018 to $0.0314 on 2 July and $0.0219 now. The same could be said for Cardano, down from $0.1413 on 1 August to $0.0845 on 1 July and $0.0582 now.
Steem fared little better, from $1.28 on 1 August last year to $0.3653 on 1 July and $0.2351 now.
So, what are we going to do in our search for the cheapest cryptocurrency to invest in? There are three possibilities.
Seek unique offerings
One is to lower our standards a little and choose a currency that, while not showing those reassuring price patterns seen with Bitcoin and Litecoin, does not appear to be in a headlong plunge. One such could be EOS, down from $7.25 on 2 August 2018 to $5.79 on 2 July and currently trading at $4.26.
A second possibility in our search for the cheapest cryptocurrency is to go back on our original decision to shun Bitcoin and Litecoin. Yes, every individual coin is relatively expensive, but need that matter, especially with regard to the more affordable Litecoin?
After all, the British pound is a “heavier” unit than the American dollar, but that does not make Britain richer or more economically successful than the United States. Adjusted for price and future performance, it could be that Bitcoin or Litecoin prove to be the cheapest crypto.
A third is to cut through the current “noise” surrounding the sector and try to pick the winners of tomorrow, those who have something unique to offer in a crowded market.
One such could be Steem, which says it “supports community building and social interaction with cryptocurrency rewards”, adding: “Steem combines concepts from social media with lessons learned from building cryptocurrencies and their communities. An important key to inspiring participation in any community, currency or free market economy is a fair accounting system that consistently reflects each person’s contribution.”
Another may be Stellar, a non-profit organisation that, in its own words, “is a platform that connects banks, payments systems and people…[and] expands access to low-cost financial services to fight poverty and maximise individual potential”.
But always bear in mind, in looking for a cheap cryptocurrency to invest in 2019, that there may be a very good reason why the top cheap cryptocurrencies are cheap, in the same way that a second-hand car may, when you are waiting for a breakdown truck, not seem the bargain you thought it was.