A Simple Strategy To Capitalize On Micro-Caps

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14 Oct 2024

Where To Begin?
Micro-caps are incredibly risky and there are so many of them 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 micro-caps. They build large 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, regarding micro-caps, it’s 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 that are in the tens of millions regarding market cap 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 important 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.

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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 invested in 2019 would have peaked at $42K in 2021. This shows 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!

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Disclaimer
First of all, I am not a financial advisor. All information provided on this website is strictly my own opinion and not financial advice. I do make use of affiliate links. Purchasing or interacting with any third-party company could result in me receiving a commission. In some instances, utilizing an affiliate link can also result in a bonus or discount.
This article was first published on Sapphire Crypto.