The Most Common Mistake in Trading Crypto - Finding "Cheap" Coins

I've recently started a Facebook group for those interested in learning more about crypto a few months ago. The group seems to be taking off and really helpful for those who are new to crypto. Some people are looking to make their first purchase and others are just wanting to sit on the sideline and learn more about crypto and follow the discussions.

It never fails that someone in the group will find a great new "cheap" coin a few times a month. The post usually starts off with how they found this coin that costs less than a penny and guess what ? ? ? it's going to the moon! I've seen a few posts on Twitter from those just starting out trading as well.

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It's exciting to find a coin that you can own a thousand of for a few hundred dollars. No one gets excited when you say you own 0.0001 Bitcoin, but tell someone you own 10,000 Doge and you sound like you know what you're doing. People who aren't familiar with the crypto space suddenly become very interested.

At the time of writing this, the price of 1 Doge is currently $0.004287 according to coinmarketcap which seems very cheap. The price of 1 Bitcoin is $8,639 which seems really expensive. Just to emphasize how "cheap" Dogecoin seems 1 BTC can buy you over 2 million Doge!

On the surface, Dogecoin is a very "cheap" coin.

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Now if the price of Doge went up 100x it would still be sitting at under $5 at around $4.28. Still sounds really cheap correct? On a USD and Bitcoin basis, it is still really cheap. If the price of Bitcoin didn't rise you would still be able to able to buy over 2,000 Doge.

Now we will look at what happens to the overall market cap if the price of Doge went up 100x. The current market cap of Doge is sitting at $490,336,373. If the price of 1 Doge went up 100x then the market cap would go up 100x as well. This would bring the market cap of Doge up to $49 billion or rank 3 of all crypto coins.

This doesn't seem all that unreasonable as Doge has been ranked pretty high in the past. However, for the price of Dogecoin to reach $8,000, the overall market cap for just Doge would be $915 trillion. To put that in perspective the overall market cap for all cryptocurrencies has never passed the $1 trillion mark.

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When determining if a coin is cheap or not you have to include the circulating and/or total supply. As you can see in the image below both Radium and Diamond are both "expensive" in terms of cheap coins, but have a market cap of < $20 million. This is due to the fact that both these coins have a limited supply (for crypto) of a few million coins.

Hope this helps those who are looking for "cheap" or "bargain" coins. Everyone is different in that market cap they think is cheap and really just depends on what level of risk that you feel comfortable gambling at. Buying low market cap coins can be very profitable, but these coins are just as likely to go to 0 as they are going to the moon.

Just to close out don't buy a coin just because it's "cheap" or any of the ones in the images I included in these posts. The coins used in this post were just used as an example. Investing in "cheap" coins is a very high-risk investment even for crypto, so don't invest any more money that you can afford to lose.

If anything was unclear or you have some great cheap coins let me know in the comments below. Feel free to shill me your bags.