Are Your Investments Delivering Life-Changing Gains Or Average Returns?
When it comes to alts and especially micro-caps, you have to answer a very simple question for yourself. Do you want to experience some decent gains, or are you looking for gains that will be so significant that they can actually change your life? Getting to the heart of this is the first step.
Micro-caps can produce enormous returns, but can also be extremely dangerous and damaging to a portfolio if the exposure is unwise and perhaps too heavy. In 2020, some of my altcoin picks exceeded 300X. Some as high as 500X. The reward is amazing, but the risks need sober consideration.
Essential Micro-Cap Investing Tips Every Trader Must Know
The information I am about to share will test that decision if you answered in favor of massive gains. It may indeed cause you to change your mind because the risk involved here is immensely high. It is important to note that this is not investment advice, and you should conduct your own research before making any decisions.
This is what I have gleaned through being in this market for the past 7 years. It feels more like 3, though. Time really seems to be accelerating at an ever-increasing pace. Before I address the risk factor, it is important to look at another element that often wears investors down and ultimately pushes them out of the game.
How Time Can Be Your Greatest Advantage In Investing
The simple yet highly powerful principle of time is one of the key elements here. This is true of any market, including the entire Crypto market. Significant time in this market should, in most cases, see positive returns. However, for smaller projects, this is often a mandatory prerequisite that can run for extended periods. Even though a specific project can have massive potential, it often takes a long time for the market to identify and validate it through price appreciation.
This can be seen in projects like Polygon and, more recently, Solana. Polygon, previously known as Matic, sat at the $0.02 level for absolute ages before violently breaking out above $2! While investors await recognition, the price can either remain largely unchanged or swing wildly. These swings can sometimes see projects sink to unimaginable lows before suddenly rising into new levels through periods of crazy price discovery. What is the point I am making here?
Simply put, you don’t get to decide the timeframe. You have to make a prior decision to sit out this period of necessity. You also need to decide whether or not you will add to these positions when prices drop significantly. In other words, you need to have conviction. Forget about diamond hands; that comes second to conviction. It is your unwavering conviction that empowers you to HODL when all seems lost. Can you stay the course, and have you done enough research to build a strong conviction in your decision?
Investing In Micro-Caps: Understanding The High Failure Rate
It is no secret that many altcoins fade into obscurity, and while they may still exist, their trading volume and blockchain activity are as scarce as mall activity during lockdown. The value and market cap of these projects are also, for the most part, absolutely erased. This is, unfortunately, the risk that always looms in the background and can even affect a good project if the team just becomes weary of trying to establish it. The risk of losing most of your investment increases significantly when you invest in unknown projects.
This is, unfortunately, the price one must pay because once stability is established, gains are severely restricted, though exceptional projects can still surprise further. Investors in altcoins, particularly micro-caps, need to consider these points very carefully before taking the plunge. My approach is always to start with a minimal investment and to average in further on the road to higher levels. If the trend is up and I buy the dips, it usually works out very well for me.
Final Thoughts
Altcoins are incredibly volatile, and anyone gaining exposure to this sector should understand the risks. As mentioned earlier, this is not investment advice, and doing your own research in this particular sector is absolutely imperative. Enjoy your altcoin hunting! See you next time!