As the crypto market slid into a bear phase this year, the steep decline pulled down virtually every digital currency—from bitcoin and ether to a broad array of altcoins.
The total market value of cryptocurrencies fell dramatically from about USD 3 trillion in November 2021 to under USD 1 trillion by late September 2022.
On the plus side, lower valuations have made many of the largest and most established cryptocurrencies more affordable. Blue-chip coins are now trading well below their prior peaks, which may offer buying opportunities for investors who understand the risks.
Bitcoin remains the largest and most widely known cryptocurrency, but thousands of other tokens claim faster speeds, broader utility or unique use cases.
For Canadian investors considering crypto, the choice comes down to utility, security, regulatory risk and how a coin fits into your broader portfolio. This guide reviews the main drivers of value, the risks and opportunities across the market, and practical considerations when choosing where to buy crypto coins.
How to pick a digital coin?
A cryptocurrency’s value is largely tied to its utility. Rather than buying based on name recognition alone, focus on what the project actually does and whether that capability is likely to matter to users and developers over time.
Key questions to ask include:
- What real-world problem does the cryptocurrency solve?
- Does the underlying technology improve user experience or lower costs compared with existing solutions?
- Is there a community of developers and users that could sustain the project?
Investors who feel a connection to a project and understand its purpose are less likely to be swayed by short-term volatility.
Based on utility, adoption, technical strengths and real-world applications, the following layer-1 protocols are commonly viewed as core holdings by many crypto professionals: Bitcoin (BTC); Ether (ETH), the native coin of the Ethereum blockchain; SOL, native to Solana; and AVAX, native to Avalanche. Layer-1 chains are the foundational blockchains that support transactions and decentralized applications (dApps), and they play a central role in decentralized finance (DeFi).
Layer-1 networks are the platforms developers choose when building decentralized apps and financial services. Holding diversified exposure to established layer-1s can give you access to the fastest-growing areas of the blockchain economy, including lending, trading and yield-generating protocols that run without intermediaries.
Video: Is crypto a good investment?
Regulatory roadblocks
Regulation and government policy can have a profound effect on crypto prices. Selling pressure on bitcoin and altcoins often follows political announcements, proposed laws or enforcement actions.
Some countries have banned or tightly restricted cryptocurrency activity, while others are working on frameworks to regulate exchanges and service providers. These moves can create uncertainty and trigger price declines, especially when major markets announce restrictive measures.
More broadly, crypto now responds to macroeconomic forces much like technology equities. Inflation, rising interest rates and labour-market shifts can prompt investors to reduce exposure to speculative assets. For some, converting crypto back into fiat currency becomes a tempting defensive move, and that selling can weigh on prices and slow broader institutional adoption.
Talking tokenomics
Tokenomics—the economic design of a cryptocurrency—matters a great deal. Supply dynamics, issuance schedules and mechanisms such as token burning influence scarcity and therefore potential value. Bitcoin, for example, has a capped supply of 21 million coins; most of that supply is already in circulation, and the finite supply is a central part of its value proposition.
By contrast, tokens with uncapped or rapidly expanding supplies can face dilution risks as more units enter circulation. Some projects implement burning or other deflationary measures to reduce supply and support price.
Greater mainstream adoption
Wider adoption and clear, useful applications are powerful tailwinds for crypto projects. Networks that deliver faster transactions and lower fees tend to attract developers, who in turn build applications that bring users and liquidity.
In earlier cycles, hype and narrative often drove price moves with less attention paid to real utility. Going forward, utility and a strong developer ecosystem are likely to matter more than marketing alone. Solana and Avalanche, for example, have drawn attention for offering fast, low-cost transactions that make them attractive platforms for dApps and DeFi services.
Technology upgrades can also spur price momentum. A prominent example is Ethereum’s transition from a proof-of-work model to a proof-of-stake model, often called “The Merge,” which aimed to improve energy efficiency and scalability. Anticipation of technical improvements can lift prices, and successful upgrades can support longer-term confidence in a platform.
Social media influence
Social media and celebrity endorsements can cause dramatic, short-term price swings. High-profile tweets or news stories have moved coins up or down quickly, and coordinated hype campaigns can create pump-and-dump dynamics.
Be cautious with coins that look particularly exposed to social-media-driven speculation. The same channels that amplify enthusiasm also make it easy for scammers to promote fraudulent schemes and false promises. If an offer sounds too good to be true, it almost always is.
Making the smart choice
If you’re considering buying crypto in Canada, look for a regulated, transparent platform that supports Canadian dollars, clear fees and reliable customer support. CoinSmart is one example of a fully regulated Canadian trading platform that emphasizes a user-friendly interface, transparent fee structures and 24/7 support.
Reputable platforms typically run a Know Your Product (KYP) review to determine which coins to list. A thorough KYP covers tokenomics, protocol mechanics, the team behind the project and legal history. Careful vetting can help platforms avoid listing risky projects that later collapse.
Opening an account with a regulated exchange is generally straightforward, and many platforms offer quick funding and same-day access to deposited funds. Promotions such as referral codes or sign-up bonuses may be available through exchanges, but be sure to read terms and verify eligibility before participating.
Read more about crypto:
- What is cryptocurrency and how do you invest in it?
- Altcoins vs. bitcoin: considerations for building a crypto portfolio
- Video resources: comparing altcoins and bitcoin
- Introductory videos: key cryptocurrencies to know
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