If you want to earn money in the crypto world, you need to invest when the project is still in its early stages, implying investing in the micro-cap sector. If you bought 279 Solana ($500/$1.79) in January, you could have sold it for roughly $69,750 less than a year later. This works out to 136x. For a $500 investment, that’s a pretty good return.
If you were early on in the Shibu-Inu mania, you could have bought 10 billion Shiba Inu for $500 ($500/0.00000005) in April of last year and sold it for roughly $800,000. This is equivalent to 1,599 times. For a $500 investment, that’s a pretty good return.
When it comes to making money with cryptocurrency, these two examples provide valuable knowledge for us all. The project must reach the top 10–25 cryptocurrencies (by market cap) to accomplish these incredible results. Solana and Shibu-Ina were both ranked in the top ten in their prime. This is crucial since it is from here that significant advantages are generated. You’d also have to get in early before the project becomes well-known, and while the project is still small — that is, it falls into the small or micro-cap category.
If you want to get a 100-fold return on your investment, your investment must meet all three of these criteria. The most critical and challenging for many investors is having an exit strategy in place to realize your gains (sorry, HODLers). The crypto market cycle is a fourth and essential element. During a bull market, both of these projects experienced colossal growth.
Rather than hoping to win the golden ticket, it would be much easier to get +10x gains on your transactions and attain the 100x through compounding several successful trades (as with Solana or Shibu-Inu). While such profits are possible, the truth is that only a small number of bitcoin businesses accomplish such tremendous growth each year. Solana, Shibu-Inu, and the many other ventures with +100x returns have demonstrated that buy-in is required while the project is still tiny and fits into the small to micro-cap sector.
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What is the Micro-Cap Sector, and what does it entail?
The market capitalization of cryptocurrency projects determines their relative position. The overall dollar market value is computed by multiplying the total number of issued coins/tokens by the market price of those coins/tokens. The Micro-Cap sector is merely one of many market capitalization levels within this industry.
Mega Market Capitalization is the highest level of cryptocurrency market capitalization, including projects with a market capitalization of more than $200 billion. Bitcoin and Ethereum are the only two crypto projects that fall into this category. It would be overly optimistic to expect 2x-3x annual returns in this area. You’d have to search at far smaller market capitalization levels to locate ventures with 25x-100x return potential.
Levels of the Crypto Market’s Market Capitalization
The Micro-Cap sector, which covers projects with a market capitalization of $10 million to $100 million, can be a favorite. It’s essential, especially when it comes to uncovering diamonds in the Play-to-Earn gaming industry, is the Nano-Cap sector, which consists of projects with a market capitalization of $1 million to $10 million. You’re looking at +100x returns if you uncover a project with a market valuation of $1M-$10M, and it goes to the top 25 (think Axie Infinity).
The Advantages of Investing in Micro-Cap Stocks
There are numerous advantages to investing in this industry that is not available in many higher capitalization levels. This includes the following:
- Return on investment is rapid (a few days to a few weeks)
- Huge possibility for growth (easy 5x-10x gains)
- Investment is not required.
It’s vital to remember that this industry is highly volatile, with daily gains and losses of up to 50% not uncommon. Small investments in this market sector, on the other hand, have the potential to deliver significant returns: the higher the risk, the greater the gain. Because of the one-of-a-kind character of this market capitalization level, a one-of-a-kind investing strategy is the best use.
Investing in Micro-Cap Stocks
When it comes to micro-cap investing, the key secret is that it’s less about the project and more about the project’s perception. When we look at the meteoric rise of Dogecoin or even Shibu-Ina, we can see that it’s less about the project’s core and more about the marketing and excitement surrounding it. This is particularly true in the Micro-Cap Play-to-Earn Gaming industry.
While the project’s fundamentals are critical, the investors’ perception of the project’s potential matters the most (and the marketing team backing the project). The pricing of Micro-Cap projects has very little to do with the business (at least at first) and much to do with the investor’s view of the business.
One of the most critical concerns when investing in the micro-cap market is how other investors will interpret the investment. Early on, the necessary price driver is the investor’s assessment of the project and the buzz surrounding it. Furthermore, because the price of these low-cap ventures is mainly influenced by investor perception and hype (and fear), the market price can be pretty unpredictable. Therefore, it’s critical to limit your time in the Market.
Risk = Time in the Market
The longer you stay in the Market, the higher your risk becomes. The purpose of this Micro-Cap technique is to get in and out in the shortest time possible while earning the most money. In contrast to a HODL or diamond hands technique, the purpose of this strategy is to gain money as quickly as feasible.
Have a Plan of Exit
Be ready to sell if necessary. This is how your gains are realized. The tell-tale ‘bell curve’ may be seen in every cryptocurrency ever traded, especially after a significant price increase. If the price rises, the price will fall. It’s a foregone conclusion. Be ready to sell if necessary. This is by far the most common blunder I see cryptocurrency traders make.
LeapFroging Your Way to Success
This method is similar to leaping between training vehicles to go where you want to go. You can only go so far in each train vehicle. After you’ve made your 5x-10x gains, you’ll go on to the next step. Rinse and repeat as needed. Because there is a higher trading frequency with this approach, it takes more time and effort. This isn’t a long-term investment strategy. There is also a greater chance that trade may deteriorate. This technique isn’t about tracking down ‘the golden one’ and keeping it. It’s all about purchasing, selling, making your 5x-10x, and then repeating the process with an eye on the next endeavor.
Stay one step ahead of the competition.
Invest in a project before it becomes famous, and then sell when influencers promote it. Do the opposite of the crowd, also known as the contrarian approach to investing.
Conclusion
This is not financial advice; instead, it is my approach to investing in this highly narrow niche industry. Different market sectors necessitate different approaches to investment.
