When it comes to cryptocurrency investment, there are factors that need to be paid attention to before making any investment decisions and to make the most profit from the investment. Penny cryptocurrencies are basically cryptocurrencies that are 1 cent ($0.01) or less than 1 cent (<$0.01). In the cryptocurrency space, penny cryptocurrencies are usually very undervalued because of a lot of factors, either because they are new or they haven’t gotten the much-needed exposure to attract investors. As far as cryptocurrency investment is concerned, penny cryptocurrencies are considered high-risk investments because but at the same time a mouthwatering opportunity for huge profit returns.
Because of the high risk that is involved in investing in penny cryptocurrencies, it is considered the great opportunity for risk-capital investments. Every good investor always try to create a portfolio and divide the investment capital into different sections that includes high-risk-high-reward investments. Penny cryptocurrencies offers high-risk-high-reward. Because of how cheap penny cryptocurrencies are, it is easier to attract a lot of investors which can skyrocket the price and lead to highly profitable investment. Also, a lot of the penny cryptocurrencies fall under the mid cap or low cap category and have a massive room for price increase.
Advantages of penny cryptocurrencies
Incredibly high-profit returns
This is one of the main advantages of penny cryptocurrencies. Because they are relatively cheap, there is a greater chance of making huge profit returns from the investment
Great for risk-capital investments
Penny cryptocurrency is considered a high-risk, high-reward investment which is great for risk-capital investments or funds set aside for risky investments.
Massive price increase potential
Penny cryptocurrencies have the potential of doing 10x, 50x, 100x and sometimes even more than 1000x in a very short time frame
Requires a very little amount of capital to acquire a large number of coins
This is another advantage of penny cryptocurrencies because it does not require large amount of capital to acquire a large number of coins which can bring in high profit returns in a very short time.
Great for short term investment
Because of the high-risk involved in penny cryptocurrencies, they are great for short term investments and quick profits
Disadvantages of penny cryptocurrencies
They are considered very risky investments
One of the main disadvantages of penny cryptocurrencies is that they are considered very risky investments. A lot of penny cryptocurrencies are in the low marketcap region which makes them a very risky to invest in. Also, a lot of penny cryptocurrencies have a very large supply which means that there is a possibility that the price can dump down to nothing in a very short time thereby leading to loss of investment capital.
Investment capital can be lost in a very short time
Because penny cryptocurrencies are very cheap especially at the early stage, and has a tendency of increasing in price in a very short time, a lot of people can accumulate a large amount of coins at a very cheap price, and once the price increases or does a 5x or 10x, they dump all the coins in the market which causes the price of the coin to crash leading to loss of investment capital for people who bought at the top.
Very volatile
Another very big disadvantage of penny cryptocurrencies is that they are very volatile. The prices of penny cryptocurrency fluctuate a lot and can increase and decrease in a very short time. Also, when there is a correction in the overall market, penny cryptocurrencies tend to decrease even more.
