The crypto market is massive, and there are many different types of cryptocurrencies you can buy. Ethereum and Solana are smart contract platforms, and XRP is a payments coin, among others. Bitcoin is so large that it has effectively created its own category.
You may want to invest in several types to build a diverse crypto portfolio, and with most of the market going through a downturn, now is a good time to buy the dip. However, you're better off avoiding one popular type of cryptocurrency: meme coins.
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A meme coin is any cryptocurrency that doesn't take itself too seriously. Dogecoin (DOGE 1.29%) was the first, and it was based on the popular "Doge" meme. Shiba Inu (SHIB 1.04%), another popular meme coin, based its dog-themed image on Dogecoin -- originality isn't required in this space.
Apart from a fun marketing theme, the appeal of meme coins is that when they take off, they can deliver life-changing returns. Dogecoin increased by over 27,000% in a six-month span from November 2020 to May 2021. Shiba Inu increased by over 70,000,000% over the first 10 months of 2021.
However, reliably finding meme coins that are going to explode is next to impossible. There are thousands of them already, and platforms like Pump.fun allow anyone to launch their own meme coins in less than a minute. Only a very small percentage of meme coins achieve any success, and when they do, it rarely lasts long. For example, after Dogecoin reached its all-time high in May 2021, it lost over half its peak value in a matter of weeks.
CRYPTO: DOGE
Key Data Points
The best cryptocurrency investments have legitimate use cases. Meme coins are much more similar to gambling than investing, which is why they don't deserve a place in your portfolio.
