Where To Begin?
Micro-caps are incredibly risky, and so many are out there. In a sea of micro-caps, there are multitudes of projects that won’t make it. On the other hand, some are positioned and destined for greatness. No two journeys are alike. Some projects will arrive a lot sooner than others. Just because a project appears to lag does not mean it is out of the race.
Sometimes, it’s simply a case of the tortoise and the hare. However, there are no guarantees, and new projects are often faced with challenges. For some, the setbacks are too severe, derailing or paralyzing the project. An investor wants to own enough coins or tokens to benefit from a moonshot. Some investors are too heavy-handed when it comes to microcaps. They build significant positions in a project that is yet to prove itself.
A micro-cap has to secure adoption and market share before becoming relevant within its particular niche. This can take time. However, micro-caps are known to rally thousands of percent. This is why it’s imperative to be exposed as early and significantly as possible. Gaining a significant holding in a micro-cap is achievable.
A Simple Formula
Figuring out how much to allocate to a particular micro-cap is relatively simple. I utilize a simple formula that is not dollar-denominated but is relative to the circulating supply. Yep, relativity ratios again! If you achieve whale status, I am sure you will be happy. Regardless of what you may think, micro-caps are easily attainable.
The widely accepted minimum threshold for a Bitcoin whale is 1,000 BTC and is approximately 0.005% of the circulating supply. So, I repeat this formula with any micro-cap project I am interested in. A $2 million market cap project will only cost $100 to gain 0.005% of the circulating supply. Sure, this is at the bottom of the spectrum. However, it reveals how attainable it is.
An interested investor can gain a whale’s share for several hundred dollars. Micro-caps with market caps in the tens of millions will, of course, cost more. However, this is an achievable target for most Crypto investors. Furthermore, accumulation over an extended period can help reduce the goal to bite-sized pieces. If a micro-cap makes it into the Top 100, an allocation of this size will be incredibly valuable.
It’s essential to get in as low as possible. If a micro-cap rallies hard, you can always allocate a little more when it corrects. However, getting in at the bottom is the main prerogative. A 0.005% holding will produce a meaningful return, especially if the project takes off and rises into the Top 100. Utilizing this strategy can help investors gain meaningful exposure while at the same time avoiding careless capital deployment.
In numerous articles, I have addressed effective capital deployment as an integral aspect of risk management. An altcoin investor who goes to town on a micro-cap project that fades away into obscurity is a good example. Instead of utilizing the abovementioned formula and further dollar-cost averaging once the project attains a reasonable level of market acceptance.
A micro-cap investment of $100 to $1000 is significant enough to produce meaningful returns. Don’t overcompensate, but don’t miss out on a modest allocation. Recently, I looked back on some of the micro-cap projects that managed to crack the code, and the returns are simply mind-blowing.
Final Thoughts
Micro-caps are where the real gains are made. I remember buying UBT for $0.01 in 2019 and reaching $4.22 in 2021. That’s a 420X return. A $100 investment in 2019 would have peaked at $42K in 2021. This shows that adequate yet disciplined exposure to the right projects can pay off when micro-caps begin rallying. Everything is relative. Get the ratios correct, and you will be well on your way. Catch you next time!
Sapphire Crypto 