Buying a new cryptocurrency may seem like a tempting opportunity to get rich quick, but it is important to realize that there are serious risks associated with it. New cryptocurrencies attract investors with promises of high returns, especially in the early stages when the price of a token can skyrocket. However, the cryptocurrency market remains highly volatile and unpredictable, and the lack of regulation and high probability of fraud make such investments especially risky. Today, we will analyze what recently launched cryptocurrencies are, what the risks of buying cryptocurrency are, why they should be treated with caution, what factors contribute to the success of cryptocurrency and how to reduce risks when investing.

What are recently launched cryptocurrencies

Recently launched cryptocurrencies are digital assets that have just entered the market, often through mechanisms such as Initial Coin Offerings (ICOs), Initial Exchange Offerings (IEOs) or Initial DEX Offerings (IDOs). These projects are in the early stages of development and their value is largely determined by speculative interest. New cryptocurrencies may offer innovative solutions based on blockchain technology, such as DeFi, smart contracts or unique applications in various industries.

However, statistics show that only a small fraction of such projects succeed. According to CoinGecko, about 5,300 new tokens were launched every day in 2024, but out of nearly 7 million registered cryptocurrencies, 3.7 million have already stopped trading and are considered “dead”.

This highlights that new cryptocurrencies for investment require careful analysis, as most of them fail to live up to expectations. The appeal of new cryptocurrencies lies in the possibility of early entry when the price of the coin is still low and the upside potential seems significant. For example, early investors in Ethereum or Solana have made huge profits due to the success of these projects. However, high returns go hand in hand with the high risks of new cryptocurrencies, which we will discuss next.

The main risks of buying a new cryptocurrency

Investing in new cryptocurrencies involves many nuances that can lead to significant financial losses:

1.  High volatility. The prices of new cryptocurrencies can fluctuate dramatically. This makes such investments highly unstable.

2. Lack of regulation. Many cryptocurrency exchanges and platforms are unregulated, which means there is no protection for investors.

3. Fraud and scams. New projects are often targeted by scammers creating fake tokens or exchanges. According to DISB, scammers often use ‘finfluencers’ to promote dubious projects, which is especially dangerous for inexperienced investors.

4. technical complexity. Using and holding cryptoassets requires technical expertise. Mistakes, such as misuse of wallets, can result in loss of funds. Investopedia reports that about 20 per cent of all bitcoins became inaccessible due to lost passwords or addressing errors.

5.  Transaction irreversibility. Cryptocurrency transactions cannot be cancelled. If you send funds to the wrong address or become a victim of fraud, there is no way to get them back.

6.  Loss of access. Loss of private keys or passwords results in complete loss of access to funds.

7.  Regulatory uncertainty. The legal status of cryptocurrencies remains unclear in many countries. Sudden changes in legislation may affect the value of the coin. For example, in Ukraine, new tax rules for cryptocurrencies are being discussed, which may complicate the accounting of transactions. You can read more about this information at: https://itc.ua/articles/kak-ukrayntsy-ynvestyruyut-v-kryptovalyutu-v-2025-godu/.

8.  Market manipulation. New cryptocurrencies with low capitalisation are vulnerable to pump-and-dump schemes, when the price is artificially inflated and then falls sharply.

9.  Liquidity problems. Low trading volumes make it difficult to buy or sell large amounts without significantly affecting the price.

10.          Technological vulnerabilities. New projects may contain bugs in the code or vulnerabilities in the blockchain, making them a target for hackers.

Why you should be extra cautious about new cryptocurrencies

New cryptocurrencies should be treated with extreme caution due to their high probability of failure. According to Binance, more than 5,000 cryptocurrencies have been deemed ‘dead’ by 2023 due to lack of trading, fraud, or discontinued development.

In addition, new cryptocurrencies often have no proven track record or history, making it difficult to assess their reliability. For example, the collapse of SQUID in 2021 showed how even popular projects can collapse, leaving investors with losses. This highlights the need for careful analysis before investing.

What factors contribute to cryptocurrency success

The success of cryptocurrency depends on several key factors that investors should consider when choosing new cryptocurrencies to invest in:

1.       A strong development team: a reliable team with experience and reputation builds credibility. For example, Ethereum's success is due to Vitalik Buterin and his team.

2.       Clear application: a cryptocurrency should solve a real-world problem. For example, Chainlink provides oracles for smart contracts, which makes it in demand in DeFi.

3.       Community support: an active community promotes and develops the project. Dogecoin, despite its lack of unique application, became popular due to the wave of hype.

4.       Scarcity: limited supply, like Bitcoin, can drive demand and value growth.

5.       Technological innovation: unique features, such as Solana's high transaction speeds, set the project apart from competitors.

6.       Partnerships and integrations: collaborations with well-known companies increase trust. For example, USDC is supported by Visa, which strengthens its position.

7.       Transparency and communication: regular updates and a clear white paper build trust. Projects that publish detailed plans are more likely to succeed.

How to reduce risks when buying new cryptocurrencies

To minimise the risks of investing in recently launched cryptocurrencies, follow these recommendations:

• • Do your own research (DYOR): research the project, check out the development team and look for reviews on platforms such as CoinMarketCap or CoinGecko.
• • Check the whitepaper: make sure the document details the problem, the technology and the roadmap. The absence of a whitepaper or its poor quality is a red flag.
• • Diversify your investments: spread your funds across multiple cryptocurrencies to reduce the risk of loss: it is recommended to allocate up to 10% of your portfolio to cryptocurrencies.
• • Invest only what you can afford to lose: given the high volatility, be prepared for a total loss of funds.
• • Stay informed: follow project news via social networks, forums and news sites to stay up to date with updates and changes.
• • Use reliable platforms: choose trusted exchanges such as Binance or WhiteBit, and use hardware wallets to store your funds safely.

Conclusion

Is it worth buying a new cryptocurrency? It's a decision that requires careful analysis and understanding of the risks. They may offer high returns, but their volatility, lack of regulation, and potential for fraud make them risky. Understanding success factors such as a strong team, clear application and community support, and following precautions such as DYOR and diversification will help mitigate risks.

The information provided in this article is for informational purposes only and does not constitute a guide to action, financial recommendation or investment advice. Cryptocurrency investments involve a high level of risk and each investor should conduct his/her own analyses, assess his/her financial capabilities and consult with professional financial advisors before making investment decisions.