Top Coin or Underdog: Which Makes a Better Investment?

Crypto investing has long ceased to be a space where only the dauntless or the delusional dare to venture, gradually turning into a very popular activity that people from all walks of life casually engage in. The appreciation potential, the increasing crypto literacy among the general public, and the growing legitimacy crypto enjoys as a financial instrument have all contributed to this phenomenon.

Now, the biggest challenge that people are confronted with when investing in digital currencies is deciding which asset they should pick since there are many types of coins in the market right now, divided into different categories such as altcoins, stablecoins, DeFi tokens, utility tokens, meme coins, and so on.

However, the decision often comes down to choosing between established cryptocurrencies with a high market cap and newly launched or lower-rated projects. Investing in a top cryptocurrency comes with a variety of benefits, but so does opting for a lesser-known coin. So, if you can’t make up your mind about which path you should follow, this article should provide you with some clarity.

The case for established coins

When one mentions crypto, people immediately think about the likes of Bitcoin and Ethereum. This is perfectly understandable since these are the most recognized and trusted crypto assets in existence, which naturally also makes them the first option for many investors.

Established coins have a lot of things going for them, starting with their most obvious strength, namely their reputation. Whether they’re the best option for investment or not is sometimes irrelevant. What truly matters is that people have heard of them, and that is enough to provide them with peace of mind when investing.

Familiarity breeds confidence, so individuals are much more comfortable buying an asset that the whole world knows about than an obscure project that has yet to prove its worth. Some never bother to research the history, features, or use cases of a digital currency if it’s popular enough, trusting that they haven’t earned their reputation for nothing.

Therefore, the main draw for popular coins comes from the fact that they have a proven track record demonstrating their strength, resilience, and appreciation potential, which makes it less likely for them to vanish overnight due to an unexpected market downturn. When a bull market comes around, causing newcomers and smaller coins to collapse, the big names in the industry still stand despite being severely affected by these events. If they were able to survive multiple market cycles and build an image as a sturdy crypto asset, they are probably robust enough to weather future challenges as well and prosper in the long run. That’s something that can’t be said about many crypto projects.

Since well-known coins are traded on most crypto exchanges and have a high trading volume, they also have higher liquidity, meaning it’s easier to buy, sell, or convert them without causing any major price disruptions. Although they remain unpredictable, this makes them less volatile than their brand-new low-liquidity counterparts, which are prone to more frequent and intense price swings. In a market where rapid fluctuations can lead to dramatic losses, stability is a characteristic that many investors appreciate.

Larger coins are not large just in terms of value; everything is bigger and more efficient about them: they have more developers working on addressing issues and helping them advance, larger user bases and communities supporting them, more data and resources that investors can consult, more secure networks, more innovative features, etc. This reduces the risk of scams and sets them up for future success, making them a smart and safe investment option.

Let’s not forget that renowned cryptos are also the first to be taken into account by institutional investors and large companies and the first to be on authorities’ radar when developing regulations, ensuring they benefit from greater adoption, enhanced security, and legal clarity.

The case for underrated projects

After the lengthy eulogy to top-rated coins, one might think there’s no point in taking smaller cryptocurrencies into account, but don’t be so quick to dismiss the underdogs of the crypto world, as they have their own advantages and might end up pleasantly surprising you.

As you may assume, one of their biggest perks as an investment avenue is their accessibility. Unlike their more renowned peers, which have higher price tags, new entrants and small-cap coins at large have much lower entry points. With their price being so low, it’s easier for traders and investors to purchase more units and add them to their portfolios.

Another interesting aspect to keep in mind is that top coins like Bitcoin and Ethereum, while more stable and valuable, have also reached a point in their development where price movements are more gradual, making explosive growth and wild gains less probable. On the other hand, undervalued assets, although riskier, offer higher growth potential. As an early investor, if you are patient enough, you may reap substantial rewards when these coins start gaining recognition and traction in the market. These hidden gems may even outperform larger coins under the right circumstances, and bring you bigger gains.

It’s also worth mentioning that new projects are generally known for being more innovative and introducing cutting-edge features, often targeting a specific niche and focusing on providing effective solutions to real-world problems, something that many older cryptocurrencies often lack. The novel applications they boast make them stand out from the rest, giving them a competitive edge and positioning them for long-term growth. Investing in these types of projects may seem like a leap in the dark at times, but the risk may pay off if people become aware of the value they offer and demand for them increases.

Bottom line

With so many different options to choose from, it’s difficult to know which way to go as a crypto investor. While no one can decide for you and tell you what you need to do, you should know that the best investments are the ones that align with your strategy, risk tolerance ,and financial objectives.