Elon Musk’s dog Floki sits in the trunk of his Tesla and smiles for the camera. It is An image that the head of the electric car manufacturer does not want to withhold from his Twitter followers. So he posted it on October 4 on social media. There he is considered a spokesman in the field of cryptocurrencies. His tweets cause the prices of Bitcoin and Co. to rise and fall. He writes “Floki Frunkpoppy” under the photo of his Shiba-Inu puppy – and triggers a spending spree in the crypto scene. To open a free trading account click on the below image.
Since then, the dogs have been loose in the crypto world. For example, within a few weeks, the crypto coins Baby Floki Billionaire grew by 20 percent, Bone ShibaSwap (BONE) by 60 percent, and Shiba Inu (SHIB) by as much as possible 265 percent – despite the recent sharp drop in prices. With a market value of $0.0000247, Shiba Inu is bobbing around well under a cent (as of October 15). It is an absolute penny stock among cryptocurrencies. Meanwhile, its market capitalization is at least 11.4 billion dollars. And that catapulted it among the 20 largest cryptocurrencies in the meantime. Now it ranks just behind it in 21st place. You can check everything regarding crypto, on a cryptocurrency heatmap so that you can make better exchanges. If someone is convinced that the world of cryptocurrencies is overheating and that the whole thing is an absurd exaggeration – such developments should be confirmed.
As the information, these coins only form a small niche of the market. However, if we talk about market share, Bitcoin is still prominent. It broke the $ 60,000 mark again on Friday evening and could be heading towards a new record high.
In the shadow of the Bitcoin rally, the values of lesser-known cryptocurrencies are also growing. And that doesn’t just apply to the exciting meme coins popular with young traders. Investors are discovering cryptocurrencies from the back rows. In a study, the crypto exchange Binance recently concluded that the development of crypto assets is often correlated. In practice, this means that the market moves up if the Bitcoin price rises. If it goes down, that depresses the market.
With Cardano (ADA) and Solana (SOL), cryptocurrencies are establishing themselves in the top ten, which offer many possible applications. They can be used, for example, to exchange smart contracts, i.e., digital contracts, via the blockchain. But how promising are hyped digital currencies, so-called crypto memes like Shiba Inu and Co.? Especially with such small cryptocurrencies, investors should pay attention to a few things.
1. Many mini coins fail
Anyone who got into Bitcoin early and never sold their coins could multiply their investment. In 2009, a digital coin was worth just a few cents. Some investors are now hoping to invest early in the next promising cryptocurrency. However, market analyst Emden warns: “Nobody should expect to get rich quickly by investing in unknown coins. You should always expect to lose your money completely.”
While significant cyber currencies such as Bitcoin are increasingly establishing themselves in the investment world, many small ones cannot hold their own in the market. It is estimated that almost 1700 cryptocurrencies have already failed. No one can predict how many of the currently around 12,000 cryptocurrencies will remain in existence – and how many of them will increase in value.
2. Beware of whales
It happens again and again that large investors shake the prices of cryptocurrencies. In the crypto world, they are called “whales.” Their trading behavior mainly influences the market since they own a lot of coins. If they sell more extensive stocks, this quickly pushes the price down. However, it is unusual for other investors to follow this so that the price falls.
Some of these whales bet on falling prices, for example, by selling borrowed coins. Then, after the crash, they buy cheap again. So they are a kind of short-seller among crypto traders.
This phenomenon also occurs with coins in the back rows. Only a few investors have the inventory of Dogecoin. Even Elon Musk, a confessed fan of the joke currency, sees it critically. A large concentration can also be observed with the Shiba Inu coin. For private investors, this dominance of individuals represents an incalculable risk.
3. Beware of dubious coins
Investments in cryptocurrencies are risky per se, and prices fluctuate wildly. But even more, risks can lurk, especially with small coins and unknown crypto projects. In addition, fraudsters and dubious traders benefit from the strong demand for crypto investments and guide investors into scams. For example, they initiate pyramid schemes or copy existing cryptocurrencies and withdraw with the money they raise.
A look at the white paper helps assess how serious a cryptocurrency is. It discusses how the project works and what problem it aims to solve. In many scams, the initiators do without such a white paper. Instead, they try to bind investors emotionally and put the supposedly high return prospects in the foreground. The white papers can be up to 44 pages for reputable cryptocurrencies such as Cardano’s Ada.