As crypto evolves, more new opportunities open up for investors and crypto enthusiasts..
On October 8, 2024, eToro introduced an experimental category for cryptoassets, designed to spotlight innovative projects, memecoins, and early-stage digital tokens that hold potential for disruption.
This article will guide you through what experimental cryptoassets are, what sets them apart, and will explain the potential risks associated with trading them.
What are “Experimental Cryptoassets?”
eToro’s experimental category highlights cryptoassets that push the boundaries of innovation in the digital asset world. These assets typically belong to early-stage projects and are often seen as high-risk, high-reward investments. The types of assets that fall into this category can include the following:
- Memecoins – Community-driven tokens that often go viral, such as Bonk Inu, a meme-based coin launched on Solana that has found real-world uses in payments and social activities.
- Initial Coin Offerings (ICOs) – New crypto launches that raise capital, often drawing significant attention for their innovative or disruptive potential.
- Viral Tokens – Tokens with a strong online presence and community backing, like the viral meme token Pepe, which has gained adoption due to its community-driven momentum.
- Innovative Blockchain Solutions – Assets such as Toncoin, the native token of The Open Network, which focuses on solving issues like scalability and transaction speed for large-scale blockchain networks.
These cryptoassets often exhibit high volatility and low liquidity, making them a risky but potentially rewarding addition to your portfolio. Community engagement is a strong factor in their appeal, as many of these projects rely heavily on the enthusiasm and support of their user base.
Why are these cryptoassets considered experimental?
The experimental nature of these assets comes from their early-stage development, emerging use cases, or the cutting-edge technology behind them. These factors can create significant price volatility, meaning their value may rise or fall dramatically in a short amount of time.
Additionally, experimental assets often face unique risks, such as potential vulnerabilities in their blockchain technology or the rare possibility of being delisted from platforms like eToro due to security or regulatory issues.
It’s important to note that this category is only applied to cryptoassets listed on eToro as of October 8, 2024.
What are the potential risks?
While the rewards can be enticing, trading experimental cryptoassets comes with heightened risks compared to more established cryptocurrencies. These risks include:
- High Volatility: The prices of experimental assets can change dramatically in short periods, leading to potential for significant losses.
- Low Liquidity: Market instability may result in cancelled orders or difficulty in buying and selling.
- Blockchain Vulnerabilities: The technology behind these assets is often still being tested, which could make them more prone to security risks or technical bugs.
- Removal: Due to legal or security concerns, platforms like eToro might be forced to remove some experimental assets, potentially leaving you with significant losses.
It’s important to be aware of these risks, and to conduct thorough research before you invest. While these cryptoassets can be highly rewarding, they also carry a strong potential for loss.
Is trading experimental cryptoassets different on eToro?
In order to mitigate the higher risks that are carried by “experimental” cryptoassets, including volume liquidity, asset stability and other considerations, eToro has introduced certain trading limits. These are designed to manage risk, and ensure that investors do not overexpose themselves to any extreme volatility.
The value or number of positions you can open in these assets depends on your eToro Club tier:
- Bronze: Up to $800
- Silver: Up to $2,000
- Gold: Up to $3,000
- Platinum: Up to $6,000
- Platinum+: Up to $10,000
- Diamond: No limits
Investors who would like to increase their limits can check their eToro Club status and see if they qualify for a higher tier.
Please be aware that these limits are subject to change without prior notice, should market conditions necessitate.
Why consider investing in experimental cryptoassets?
The experimental crypto category on eToro offers an exciting opportunity to invest in emerging projects that could play a significant role in shaping the future of blockchain and digital finance.
However, with the potential for high rewards comes significant risk. It’s crucial to evaluate your risk tolerance, conduct in-depth research, and only invest amounts you are willing to lose.
Staying informed is key. We recommend that you add these assets to your eToro watchlist, review their performance on a regular basis, as well as keeping an eye out for updates from the eToro community.
You can learn more about experimental cryptos on eToro here.