The fact is that a +1,000x return on your investment won't be found among the top 100 cryptocurrencies if you're seeking for that life-altering cryptocurrency investment. It won't even be listed among the top 1,000 cryptocurrencies (by market capitalization).
You should begin your hunt in the micro- and nano-cap market in order to uncover those precious jewels that offer the 1,000x. If you look a bit closer, you can find that you need to invest pretty much from the bottom, which for most ventures is exactly when they begin, in order to locate those +1,000x investments.
If you want to succeed in the cryptocurrency industry, you must invest when the project is still young and in the micro-cap sector.
If you had spent $500/$1.79 on 279 Solana in January 2021, you could have sold it for about $69,750 a year later. This is 136 times larger. Not a terrible return on investment for $500.
If you were an early adopter of the Shibu-Ina mania, you might have purchased 10 billion Shiba Inu for $500 ($500/0.00000005) in April of last year and sold it six months later for approximately $800,000. This is equal to 1,599 times. Not a terrible return on investment for $500.
These two instances give us all crucial information on how to profit from cryptocurrencies.
1. The project needs to rank among the top 10 to 25 cryptocurrencies in order to achieve these extraordinary gains (by market cap). When they were at their best, Solana and Shibu-Ina were both rated among the top 10. This is crucial since it's where the enormous gains come from.
2. You would also need to invest early, before the general public learns about the project, and while it is still small, that is, it belongs to the small- or micro-cap sector.
3. Having an exit strategy is the most crucial and, unfortunately for many investors, the most challenging step so that you can realize your gains.
If you want to get a 100x return on your investment, your investment must satisfy at least all three of these criteria.
The cryptocurrency market cycle is a fourth, very important element. These two projects benefitted from a bull market to grow significantly.
Even though gains of this nature are theoretically achievable, only a small number of cryptocurrency ventures actually experience yearly growth of this magnitude.
Instead of hoping to win the golden ticket, it would be much simpler to make +10x gains on your transactions and, through the compounding of numerous successful trades, attain the 100x (as with Solana or Shiba Inu).
It has been clearly demonstrated by Solana, Shiba Inu, and the several other projects that have generated returns of +100x that buy-in is essential when the project is still tiny and falls under the small to micro-cap sector.
What Is The Micro-Cap Sector?
The market capitalisation of cryptocurrency projects determines their relative ranking. There are numerous market capitalization levels in this industry, including the Micro-Cap sector.
Market capitalization, which is determined by dividing the total number of issued coins or tokens by their market value, represents the project's overall dollar market value.
Mega Market Capitalization is the level of cryptocurrency projects with the highest market capitalization, which is larger than $200 billion. Only two cryptocurrency projects, Bitcoin and Ethereum, are included in this market. In this industry, expecting 2x–3x returns (per year) would be extremely optimistic.
You would need to search for projects with 25x–100x return potential at considerably lower market capitalization levels.
The Micro-Cap sector, which covers projects with a market value of between $10M and $100M, is my particular favorite.
The Nano-Cap sector, which includes projects with market capitalizations between $1 million and $10 million, is another one of my favorites, particularly when it comes to discovering hidden gems in the Play-to-Earn gaming industry.
You could expect +100x returns if you locate a project with a market valuation of $1M–$10M and it rises to the top 25 (see Axie Infinity).
The Advantages of Micro-Cap Investment
When it comes to investing in this industry, there are a lot of advantages that do not apply to many of the higher capitalization levels. This comprises:
1. Extremely quick return on investment (a few days to a few weeks)
2. Significant upside possibilities (easy 5x-10x gains)
3. Low investment requirement
It's vital to remember that this industry is very volatile, with daily gains or losses of 50% being usual. Small investments within this market segment have the potential to generate enormous profits, nevertheless. Bigger reward, higher risk.
Given the distinctiveness of this market capitalization level, a distinctive investing approach ought to be used.
Investment Strategy for Micro-cap Sector
The key secret to investing in the micro-cap sector is that it is less about the idea itself and more about how others perceive it. Within the Micro-Cap Play-to-Earn Gaming industry, this is particularly true.
If we examine the exponential growth of Dogecoin or even Shiba Inu, we see that marketing and project enthusiasm were more important than the core of the projects.
Although the project's fundamentals are crucial, investors' perceptions of the project's potential ultimately matter the most (and the marketing team backing the project).
The cost of Micro-Cap initiatives (at least initially) is mostly determined by the investor's perception of the project than by the firm itself.
Therefore, one of the key factors to take into account when investing in the micro-cap sector is how other investors will view the investment. Early on, the main price determinant is the investor's assessment of the project and the enthusiasm surrounding it.
Additionally, because the market price for these small-cap ventures is mostly influenced by investor hype and apprehension (or both), it's crucial to keep your time in the market to a minimum.
1. Time In The Market = Risk
The danger you face increases with time spent in the market. With this Micro-Cap approach, the objective is to enter and exit the market with the highest return in the shortest amount of time.
In stark contrast to a HODL or diamond hands method, the aim of this technique is to gain money as quickly as feasible.
2. Have An Exit Strategy
Have a sale ready to go. You achieve your goals in this way. Period. Every cryptocurrency ever traded has the recognizable "bell curve," especially following a significant price increase. If the cost increases, the cost will decrease. It's absolutely true. Have a sale ready to go. I believe that this is the largest error I observe cryptocurrency traders making.
3. Leapfrogging Your Gains
This tactic is comparable to using train cars as a jumping off point to reach your destination. You can only travel so far in a single train car. You go on to the next after your 5x–10x gains. Repeat after me.
Due to the higher frequency of trading, this approach does need more time and effort. This approach is not a buy-and-hold one. Furthermore, there is a higher chance that a deal may fail.
Finding "the golden one" and clinging to it are not the goals of this technique. It involves gaining money by purchasing, selling, and then repeating the process while constantly looking ahead to the next enterprise.
4. Keep up with the market
Before a project gains traction, invest in it, and when influencers start promoting it, sell. Do the opposite of the herd while investing, which is also known as the contrarian approach.
5. Learn Crypto Chart Patterns
No matter if you want to invest in popular cryptocurrencies or the Micro-Cap market, having a fundamental understanding of chart patterns is crucial.
A chart pattern is a shape found in a price chart that, based on previous moves, predicts the direction of the next price movement. Technical analysis is built on chart patterns, which also assist traders in forecasting likely future price movement.
6. Leveraging Market Cycles
It's also important to understand the market cycle if you want to capitalize on your success in the market. Purchase when the market is weak and exit when it is about to peak. Fortunately, identifying the market cycle is not difficult, and there are numerous indications that may be used to do so.
This is just my personal strategy to investing in this extremely specialized niche industry, as is always the case. Different market sectors necessitate different approaches to investment.
ARTICLE SOURCE: FINLAZER
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